Silver Prices Edged Higher on Lingering Geopolitical Uncertainty

Key Insights

• Silver prices moved higher as yields slid
• The dollar rose as uncertainty in Ukraine weighs on the Euro
• Yields fell as investors digested inflation data
• Oil prices fell as the Biden administration considers deploying strategic petroleum reserves  

Silver prices made small gains on Thursday amid an uncertain economic outlook. Benchmark yields dipped several basis points as economic data signals that the market might face weakness. Gold prices were headed for their best quarter until Biden’s oil news was released. The announcement led to easing inflation concerns and less demand for gold as a safe-haven asset. The dollar strengthened against other major currencies. Limited progress in Russia and Ukraine talks caused the Euro and other commodity-linked currencies to decline. Oil prices moved lower as the Biden administration considers deploying huge reserves through the strategic petroleum reserves. The administration is considering deploying 180 mln barrel draw over six months, equating to 1mln barrels per day. The US stockpile of 570 mln barrels. The plan might have a more significant impact on energy prices.

The PCE Deflator, which the Fed targets, jumped 6.4% in February year-over-year from 6% in January. The PCE index measures the prices paid for domestic goods and services. This increase was the steepest since 1982, indicating that there have been more robust increases in prices of goods, services remained unchanged. The core PCE inflation, the Fed’s preferred inflation gauge, which excludes food purchased at home and food services, increased 5.4% from a year ago. The reading was slightly under expectations of 5.5%. Rising inflation due to the Russia-Ukraine war has generated concerns about economic growth.

Technical Analysis

Silver prices pulled back and stabilized just under the critical $25.00 level. Silver is trading higher due to the Fed’s hawkish stance and recent macro data, pointing toward a 50-basis point rate hike in May. However, progress in the Russia-Ukraine peace talks signals downward price movement. Traders exercising greater caution amid critical US data have limited silver prices’ ability to climb. 

Resistance is near the 10-day moving average near 25.04. Support is seen near the 50-day moving average near 24.32. Short-term momentum is positive, but momentum decreases as the fast stochastic has a crossover buy signal.

The medium-term momentum is negative as the histogram prints negatively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory but decelerating, which reflects the upward trend in price movement.