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Silver Price Prediction – Prices Plunge as Riskier Assets Gain Traction

Silver tumbles to support as the dollar rallies
David Becker
Rows of golden and silver bars

Silver prices were hammered on Tuesday, as the dollar surged and riskier assets rallied. Gold prices also declined putting downward pressure on silver prices. US yields moved higher making the dollar more attractive, which generated headwinds for silver prices. President Trump was on the tape on Tuesday stating that the Federal Reserve should lower rates to help the US pay down its national debt. The US Congressional Budget Office reported that the US budget deficit will break 1 trillion in 2020, the highest level in 8-years. This will be a 2.2% increase in the deficit.

Technical

Silver prices were taken out to the woodshed, declining a robust 3.4% and holding just above support near the 50-day moving average at 17.44. Resistance is seen near the 20-day moving average at 17.99. Prices closed on the lows of the session which is never a good sign.  A close below the 50-day moving average would lead to a test of the December lows at 16.53. This comes on the heels of Monday’s Doji day, where prices were rejected from higher levels.

Momentum is negative as the RSI tumbled lower reflecting accelerating negative momentum. The MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. Short term momentum flip-flopped, turning positive on Monday and negative on Tuesday.

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Trump Wants Lower Rates

President Trump continues to pitch for lower rates. He even would love to see negative rates. This most recent comment to the Federal Reserve for lower interest rates was that it could help the U.S. pay down its burgeoning national debt. In a tweet, the president said again that the central bank should cut its key lending rate so it’s more in line with that of its global peers.

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