Silver Prices Surge as Yields Pull Back

Silver prices surged higher on Wednesday after a strong first part of the week. US stocks remain flat as U.S. Treasury yields soar. Investors are pricing in the Fed rate hikes of over a 25-basis point increase in  March. The 10-year yield surged to 1.9% and hovers around 2-year pre-pandemic highs. The 2-year yield curve also held near 2-year highs but slightly retreated. Although gold edged higher to 1,840, surging yields will cause downward pressure on gold and cause it to stay in the range of 1,800.

Technical Analysis

On Wednesday, silver prices continued to push higher. Resistance is seen near the 200-day  moving average at 24.65. Support is seen near the 100-day moving average at 23.28. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are now overbought. The fast stochastic is printing a reading of 97, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Housing Starts Data Rises

Private housing starts in December were at 1.702 million up 1.4% from November. The data exceeded expectations and indicates optimism in the residential housing market. Even though December is usually a slower month, elevated demand for housing has led to continued increasing market activity. The higher-than-expected reading is positive for the USD. A stronger dollar is negatively correlated to silver prices.