Silver Price Prediction – Prices Fall as the Dollar Rallies

Silver prices eased on Monday after rallying 4.8% last week.  The dollar rallied along with U.S. Treasury yields following a stronger than expected Empire Manufacturing survey. Inflation remains the key topic following last week’s CPI, which showed a 6.2% year-over-year headline growth figure. Gold prices eased putting downward pressure on the entire precious metals complex.

Technical analysis

Silver prices eased on Monday. Prices have formed a reverse head and shoulder pattern which is a bottoming breakout pattern. This is likely a pause that refreshes.  Support is seen near the 10-day moving average at 24.40. Target resistance is the August highs at 26. Short-term momentum has turned negative as the fast stochastic generates a crossover sell signal. Prices are overbought as the fast stochastic is printing reading of 86, above the overbought trigger level of 80. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Manufacturing Remains Robust

The New York Fed’s Empire State manufacturing business conditions index rose 11.1 points to 30.9 in November. Expectations were for reading near 22.  Any reading above zero indicates improving conditions. The new-orders index rose 4.5 points in November to 28.8, and the shipments index soared 19.3 points to 28.2. Unfilled orders slipped and delivery times lengthened. Inventories fell slightly. Employment rose 8.9 points to a record 26 in November. The prices-received index hit a record high in November while the prices-paid reading was not far below its record high. Optimism dipped in November as the expectation index for six-months ahead fell 15.1 points to 36.9.