Silver Prices Slump on Profit Taking

Key Insights

• Silver prices reversed course forming closing near the lows
• The Dollar tumbled on higher yields
• The U.S., two-year yields, hit a 14-month high
• Gold reversed lower

Silver prices broke reversed lower on Wednesday, as riskier assets rebounded from oversold conditions. The upward pressure on stocks took some of the upward momentum out of metals, and commodity prices in general. Geopolitical pressures remain, and there is no real end in sight to the lack of commodities that Russia and Ukraine would normally export.

The jobs data released on Wednesday was better than expected. The JOLTS data for January showed a slight dip, but it was down from an upwardly revised December, a record high for the number of jobs openings in the United States.

Technical Analysis

Silver prices reversed Tuesday breakout, rejecting higher prices, and closing near the lows. This is not a pretty pattern. Support is near the 10-day moving average that comes in near $20.90. Resistance is seen near the March highs at 26.94. Short-term momentum is negative as the fast stochastic reversed and generating a sell signal falling out of the overbought territory. This pattern was mimicked by the RSI, which reversed lower, reflecting accelerating negative momentum.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is upward sloping, which likely points to upward prices.