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David Becker
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Silver prices dropped sharply on Monday following a robust decline on Friday. The dollar edged higher, weighing on silver and generating headwinds for the entire precious metals complex.  U.S. Yields moved lower as investors moved into safe-haven assets.  The Home Builders index edged slightly lower, which paved the way for lower yields.

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Technical analysis

Silver prices dropped sharply on Monday for the second consecutive trading position slicing through trend line support and headed to a horizontal support line seen near 25.55. A break of this level would lead to a test of the March lows at 23.86. Resistance is seen near the 20-day moving average at 20.02.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic has moved lower, printing a reading of 6, well below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

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U.S. Homebuilder Buyer Traffic Dropped

The combination of higher construction costs and the spread of the delta variant of COVID eroded Homebuilder confidence. The National Association of Home Builders dropped 1 point to 80 in July. The index stood at 72 in July 2020. The index hit a record high of 90 in November of last year.While lumber prices have fallen by more than 50% in the lumber futures market, those savings have not yet trickled down to builders, remodelers or consumers.

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