Silver Price Prediction – Prices Rise But Fall Short of Key Resistance

Silver prices surged higher on Wednesday as the dollar retraced some of its gains. U.S. yields were mixed as the 2-year yields continued to gain ground, but the curve’s long-end eased. Gold prices also gained traction allowing silver to rally.  Since silver is priced in dollars, a weaker dollar generally leads to a stronger quote for the yellow metal. The U.S. Labor Department released a stronger than expected CPI report, but most of the gains were due to the volatile food and energy sector.

Technical analysis

Silver prices surged higher on Wednesday, testing resistance near the 50-day moving average at 23.37. Support is seen near the 10-day moving average at 22.61. Short-term momentum is positive as the fast stochastic recently generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 94, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Core CPI Rise Less than Expected

The CPI rose 0.4% for the month, compared with the 0.3% expected. On a year-over-year basis, consumer prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991. Excluding food and energy, which are the more volatile components of the price index, CPI increased 0.2% on the month and 4% year over year, against respective estimates for 0.3% and 4%. Food prices also showed notable gains for the month, with food at home rising 1.2%. Meat prices rose 3.3% just in September and increased 12.6% year over year.