Silver Price Prediction – Prices Tumble but Seasonals Point to Higher Prices

Silver prices tumbled on the first trading day of 2022 as the dollar rallied and yields rose. Riskier assets such as stocks sending the 2-year yield to the highest level since March of 2020. This week is packed with U.S. data anchored by U.S. employment reports. Historically, silver has outperformed in January.

Technical Analysis

On Monday, silver prices dropped sharply. Support is seen near the 10-day moving average at 22.85. Resistance is seen near the 50-day moving average at $23.44. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices moved out of overbought territory. Medium-term momentum has 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 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.

Silver Seasonality

Silver prices generally experience positive returns in January. Over the last 5-years, silver prices have increased 100% of the time in January, rising by 3.5%. During the past decade, silver prices have increased 80% of the time in January for an average gain of 4.1%. During the past 20-years, silver prices have increased 75% of the time for an average gain of 3.7%.