Silver Prices Ease Despite that EU Considers Imposing New Sanctions on Russia

Key Insights

• Silver prices eased as the dollar strengthened
• The dollar rose amid potential EU new sanctions on Russia
• The yield curve inverted, indicating a potential Key part of the yield curve inverted following robust jobs data
• Oil prices climb as European countries might place new sanctions on Russia’s energy sector

Silver prices are subdued despite the headwind that the EU might place new sanctions on Russian energy exports due to little progress in negotiations with Ukraine. The 2s-10s and the 5-30s parts of the yield curve inverted, signaling a possible recession. The new sanctions were a tailwind for both silver and gold prices. However, safe-haven demand might decrease if tensions ease between Russia and Ukraine or due to imminent rate hikes. Oil prices rise 4% as there is talk of European countries imposing new sanctions on Russia’s energy sector. Due to a pause in talks, oil prices also increased as Vienna might not renew the Iran nuclear deal. Investors await minutes from the latest FMOC meeting, which will be released on Wednesday.

According to the Commerce Department, US factory orders slid in March. Today’s reading marked the first decline in ten months. New orders for manufactured goods fell by 0.5%, or by $2.7 billion to $542 billion. Economists estimated that orders would slide by 0.6%. Additionally, new orders for durable goods fell 2.1%, or by $5.8 billion to $271.7 billion. The reading rose for the past four months before February. For nondefense capital goods, excluding aircraft, orders dropped a revised 0.2% in February. Demands in the factory sector could be waning despite the sector’s positive gains during the pandemic.

Technical Analysis

Silver prices traded about 0.5% lower to start the week due to the Fed’s hawkish stance and new sanctions on Russia that could act as a headwind or a tailwind, respectively. Hawkish Fed policy will strengthen the dollar, which will increase the opportunity cost of holding non-yielding, safe-haven assets. This situation can cause XAG/USD to break below support. Support is seen near the 200-day moving average near 23.9. Resistance is near the 10-day moving average near 24.9. Short-term momentum turned negative as the fast stochastic had a crossover sell signal.