Silver Price Prediction – Prices Fall on Dollar Strength

Silver prices continued to fall after dropping more than 5.3% on Monday and Tuesday combined. The dollar continued to rally, putting downward pressure on silver prices. U.S. short-term treasury yields continued to rise as the markets focused on inflation. The Commerce Department released its inflation gauge along with stronger than expected GDP and consumption. The Labor Department reported strong jobless claims, which declined below the 200K mark for the first time since the pandemic started.

Technical analysis

Silver prices continued to fally after breaking throught support near an upward sloping trend line that comes in near 23.97, which is now seen as resistance. Target support is seen near the November lows at 23.02. Medium-term momentum has turned negative as the MACD (moving average convergence divergence index) generated a crossover sell signal. This scenario 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. Short-term momentum is also negative as the fast stochastic recently generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 8, below the oversold trigger level of 20 which could foreshadow a correction.

 Inflation Rises in Line with Expectations

Core personal consumption expenditures, which exclude food and energy increased 4.1% from a year ago, in line with expectations. The headline PCE index rose 5%, the fastest gain since November 1990. Consumer spending increased 1.3% during the month, higher than the 1% expected. That came with a 0.5% increase in personal income, well ahead of the 0.2% estimate. While consumer spending is rising, confidence is falling. The University of Michigan dropped to 63.5 for November, its worst in a decade and down from 67.9 in October.