Silver Prices Maintain a Negative Bias Amid a Stronger Dollar and Tense Global Market Conditions 

Key Insights

• Silver prices continue to decline ahead of the Fed’s aggressive rate hike.
• Treasury yields were mixed as global uncertain weights on sentiment.
• Oil prices reversed gains despite lingering geopolitical tensions and uncertain demand outlook in China. 

Silver prices continue to face downward pressure as the dollar strengthens. A stronger dollar makes commodities like silver more expensive for buyers to purchase in other currencies, which reduces demand. Benchmark yields were mixed but remain little changed due to ongoing global market uncertainty. 

Gold prices declined as the dollar rose to its highest level before the pandemic. The dollar is underpinned by prospects for aggressive rate hikes and safe-haven appeal due to uncertainty in China and Europe.

Oil prices traded lower as the volatile market responded to the prospect of stimulus in China to boost oil demand despite ongoing geopolitical tensions.The IMF stated that Asia faces a stagflationary outlook as commodity prices soar and economic growth is expected to weaken. 

Pending home sales, which is a measure based on contract signings, declined for the fifth consecutive month by 1.2% from the previous month. Pending home sales rose in the Northeast and fell in the other three locations. The index slid 8.2% year-over-year.

The sharp decline in contract signings indicates that rising mortgage rates have reduced people’s ability to buy a home despite that demand for homes remains.

Technical Analysis

Silver prices hit a two-month low near 23.20 in today’s trading session. A stronger dollar has capped silver prices despite geopolitical risk and uncertainty in China. Silver prices will continue to face downward as Core PCE and US GDP will underpin a 50-basis point rate hike in May and at its next meetings.  

A break below the $23.00 level will put downward pressure on silver prices, which will test lows in the $22.00 region.

Support is seen near the November 2021 lows near $23.00. Resistance is seen near the former support level of the 200-day moving average near 23.84. Short-term momentum is negative but converged as the fast stochastic might have a crossover buy signal.

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