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Silver Slides as Volatility Continues

By:
Kenny Fisher
Updated: Sep 10, 2019, 12:10 UTC

Silver continues to be marked by strong volatility, as the metal has posted sharp losses in Thursday trade.  XAG/USD started the day at 19.53, after strong gains over the previous two days. However, the pair retraced and is down 2.82% in the North American session. The pair is back below the symbolic 19.00 level.

Silver daily chart, September 10, 2019

Silver falls below 19 level

Thursday’s decline represents a buying opportunity, but traders would be wise to exercise caution in this turbulent period. Investors have been jumping on the silver bandwagon and snapping up silver since August 23, during which time the metal has gained an impressive 10.8%, even when Thursday’s losses are taken into account. This buying spree means that silver is due for a correction due to profit-making. It’s still too early to tell if Thursday’s decline is a clear downward trend – activity in Thursday’s North American session and on Friday may give us the answer.

What’s next for silver? There is immediate support at 18.60, which up until Wednesday had been a critical resistance line. This is followed by support at the round number of 18.00. On the upside, 19.50 was breached on Wednesday, but this was only a temporary setback. Next is the 20.00 level, which has psychological significance. This line has not been tested since September 2016.

Traders should also keep in mind that silver and gold have been trading in tandem on Thursday – gold has also posted sharp losses, falling 2.2% on the day.  Finally, I would suggest keeping a close eye on Friday’s employment numbers. Wage growth is expected to remain unchanged at 0.3%, while nonfarm payrolls are projected to dip to 160 thousand. If these numbers prove to be stronger than expected, it would point to stronger economic growth in the United States. This could boost investor risk appetite, which could translate into losses for both silver and gold.

XAGUSD 4-hour chart September 4 Silver
XAG/USD 4-Hour Chart

About the Author

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.

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