Silver Prices Edged Lower As Dollar and Yields Face Downward Pressure

Key Insights

• Silver prices remain little changed  
• The dollar moved lower, losing safe-haven appeal
• Yields fell as jobs data pointed toward greater inflation concerns
• Oil prices tumbled following positive-looking peace talks

Silver prices traded mostly flat on Wednesday, ending the day in the green. GPD indicated a 7.1% increase in economic growth, which bulls did not find impressive. Benchmark yields decreased amid flattening bond spreads. The 5s-30s inversion dissipated on Tuesday. The inversion signaled the possibility of a recession due to the Fed tightening interest rates. Gold prices rose as the dollar and yields slid. The dollar fell as peace talks reduced the dollar’s safe-haven appeal and boosted the Euro. Oil prices increased as the US considers imposing additional sanctions on Russia in industries that are crucial for sustaining the invasion of Ukraine. 

The ADP Private Payroll Report indicated that private payrolls rose by 455,000 in March, exceeding expectations. Economists anticipated that 450,000 new jobs would be created in March. The previous month had 486,000. The leisure and hospitality sectors made the most significant gains, with 161,000 new positions. Hiring remains robust despite a tightening labor market driven by the Fed’s hawkish stance. This report comes two days before the closely watched nonfarm payrolls report, which shows job growth.

Technical Analysis

Silver prices peaked above $25.00, testing the 10-day moving average before retreating to the $24.80 level. Although silver is trading higher, Russia-Ukraine peace talks point toward a downward trend. Critical US data and decreasing geopolitical uncertainty will generate downward movement for the metal. Further weakness could lead to a drop to the 200-day moving average. The $26.00 threshold will be a test, but bull prices are likely capped off.

Support is near the 50-day moving average near 24.32. Resistance is seen near the downward sloping trendline near 25.7. Short-term momentum turned positive as the fast stochastic generated 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.