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David Becker
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Silver prices continued to move sideways on Wednesday, forming a bear flag continuation pattern. Copper prices rallied, helping to buoy silver prices. IHS’s stronger-than-expected PMI manufacturing figures helped push the U.S. treasury yields higher, buoying the dollar and generating some headwinds for silver prices. Gold prices also moved sideways keeping the precious metals complex rangebound.

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Technical Analysis

Silver prices continued to consolidate forming a bear flag pattern. This type of pattern is a pause that refreshes lower. After a move lower prices move sideways forming a flag pattern (this type of flag is upsidedown), and when trend line support is broken, prices tumble lower. Support near an upward sloping trend line that comes in near 25.17. Resistance is seen near the 100-day moving average at 26.59. The 10-day moving average is poised to cross below the 50-day moving average which means that a short-term downward trend is in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is also printing a reading of 10, below the oversold trigger level of 20 which foreshadows a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a declining trajectory which points to lower prices.

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Inflation Might Not Be that High

Last week the Fed changed their dot plots which buoyed U.S. Treasury yields. On Tuesday the Fed Chair walked back some of those statements. The Fed Chair said that the monetary policy committee was comparing inflation in May to Inflation before the pandemic to gauge how much prices have moved up before the lockdowns. During that period, gasoline prices tumbled along with building materials as activity dropped. When looked through this lens, inflation is closer to 2% than the more recent 5% year over year inflation reported by the CPI from the Labor Department.

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