Silver Prices Whipsaw Despite Gains in Gold

Silver prices fell on Tuesday for the third consecutive day in the wake of weakening economic data. US treasury yields rose as the 2-year moved up 3.8 basis points and the 10-year moved up 4.6 basis points. The Federal Reserve will announce its decision on monetary policy tomorrow and will likely have the first rate hike in March. The US dollar strengthened ahead of the Fed policy tightening. Gold prices moved higher due to concerns over geopolitical Ukraine-Russia tensions and the Fed announcement caused investors to flock to the safe-haven metal.

Technical Analysis

On Tuesday, silver prices declined for the third consecutive trading day testing a key support level. Support is seen near the 50-day moving average at 23.08. Long-term resistance is seen near the 200-day moving average at 24.61. Short-term momentum is negative as the fast stochastic is printing a reading of 72, below the overbought trigger level of 80. Medium-term momentum remains positive as MACD (moving average convergence divergence) index crossover indicates a buy signal. However, the MACD line (the 12-day moving average minus the 26-day moving average) is decelerating and converging to the MACD signal line (the 9-day moving average of the MACD line), as momentum might turn negative.

IMF Forecast Shows Weaker 2022 Growth Expectations

The IMF expects global gross domestic product to weaken from 5.9% in 2021 to 4.4% in 2022. This figure was more than half a percentage point lower than previously estimated.  The revised forecast is based on the surge of Omicron and increased market volatility due to rising inflation and supply chain disruptions. Higher inflation will persist longer than initially anticipated, but it will cool down later this year. The US is expected to grow 4.0% this year and China is expected to grow 4.8% this year, both down from earlier estimates from Covid disruptions.