Silver Price Prediction – Prices Break Out on Dollar Weakness

Silver prices broke out on Tuesday, closing above trend line resistance. The dollar moved lower but settled well off the session lows rebounding during the North American trading session. U.S. yields were mixed, with the 10-year yield rising while the 2-year yield pulled back. Higher yields led to an increase in mortgage rates which could reduce refinancing in the futures according to the Mortgage Brokers Association.

Technical analysis

Silver prices broke out, closing above trend line resistance made from a downward sloping trend line that comes in near $23.36. Additional support is seen near the 50-day moving average at 23.27. Target resistance is seen near the September highs at 24.82. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Mortgage Rates Rise

Higher treasury yields lead to higher mortgage rates. A forecast released by the Mortgage Bankers Association predicts the average rate on the 30-year fixed mortgage will hit 4% by the end of 2022, up from around 3% now. That will result in a 62% drop in refinance originations to just $860 billion. It deepens the anticipated 14% decline in 2021 to $2.26 trillion.