Stubborn Silver Flirts With 18.00

Silver has posted small gains in Friday trade. Currently, silver is trading at $17.87, up $0.03 or 0.20% on the day. On the fundamental front, the week wraps up with Core PCE Price Index, an inflation gauge that is carefully monitored by the Federal Reserve. It is expected to remain at 0.1%. As well, the U.S. releases UoM Consumer Sentiment, which is expected to show a strong reading of 99.1 points.

Silver Recovers, $18.00 in Sight

Silver continues to show swings this week. The metal took a hard fall on Tuesday, declining 3.4%, its sharpest one-day drop since September. The catalyst for the slide was a sparkling CB Consumer Confidence in January, which lifted risk appetite and weighed on silver and gold prices. However, silver has since reversed directions and recovered some of these losses.

China Virus Dampens Risk, Lifts Silver

The China coronavirus, which has spread to at least 17 countries, including the U.S., continues to weigh on global markets. The outbreak has killed 170 people in China and afflicted some 8.000. Global businesses have shut their operations in China, and many airlines have reduced or canceled their flights to Chinese destinations. The virus is expected to take a toll on the Chinese economy, and there are fears that China could use the virus as a pretext to opt-out of its commitment to purchase more U.S. farm goods, as part of the ‘Phase One’ trade agreement. This background has raised risk apprehension and made safe-haven assets such as silver more attractive to investors. With the virus expected to continue to spread, I would not be surprised if silver crosses above the 18.00 level next week.

Silver Technical Analysis

Silver is up for a third straight day, as the trend remains upward. Note that the metal has crossed above the 50-EMA for the first time since mid-December. The 18.00 level is showing resistance, but could give way to the positive momentum we’re seeing. There is further resistance at 18.60 and at 19.00. On the downside, there is significant support – the 200-EMA is at 17.04, just above a support line at the round number of 17.00.