Silver prices plunged near two-month lows yesterday. Prices dropped more than three and a half per cent in the last three sessions. Speculation over raising the U.S. debt limit amid the strong dollar continued pressuring bullion prices. Since the start of the month, prices dropped by 4.45%.
Fears of a U.S. debt default persist as lawmakers made no headway in striking a debt ceiling agreement. A U.S. default is anticipated to cause the nation to enter a recession and have significant effects on the world economy. With Treasury Secretary Janet Yellen positing a June 1 deadline for default.
Additionally, this occurs before a June 1 deadline for a US debt default. which would be disastrous for the world economy and could cause the United States to enter a recession. Rating agency Fitch warned of a U.S. ratings downgrade in the event of a default.
Strength in the dollar weighed on commodity markets. A two-month high for the dollar against a basket of currencies was reached as a result of anticipation that U.S. interest rates will stay higher for longer.
The Fed’s May meeting minutes, which were made public on Wednesday, revealed that while decision-makers were split on whether to raise rates further in June, they did not rule out reducing rates this year, giving the dollar a hawkish outlook.
Further, the focus remained chiefly on negotiations among lawmakers over raising the U.S. spending limit, although neither Democrat nor Republican negotiators offered any cues on when a deal could be reached.
Adding to this, the U.S. will set to release Prelim GDP q/q number and Unemployment Claims. Both numbers will have a strong impact on the prices.
Technical Outlook
Silver prices plunged more than 1.49% yesterday. Prices dropped to the day’s low of 70854 which was the lowest level since 30 March 2023.
The outlook given on 12 May 2023, has proven accurate with the price dropping towards our both predicted levels.
For more detail please refer to our blog ” Silver Plunged to a three week low. What next? “On the above chart, an AB=CD pattern was noted which is creating a probability for a 2%-3% fall in the near future. Now, a break below 70520 will drag silver prices towards the next support of 68500-67800.
On the upside, immediate resistance is seen at 71850 a break above only will expect to recover towards 73200-74500.