SILVER trading on critical level, will it break or not?

SILVER trading on critical level, will it break or not?

After witnessing a drastic fall in the previous trading session, SILVER future trading neutral today.  As most traders stayed sideways ahead Federal Reserve Chair Jerome Powell after stronger-than-expected U.S. employment data ramped up fears of more monetary tightening.

On Tuesday, Fed Chair Powell and Bank of Canada Gov Macklem Speaks  are due at 10.30pm and 11pm. Market expects to witness huge volatility during the speech.  

SILVER Future dropped down more than 3.50% on Friday, as after labor data showed that U.S. employment remained far stronger than expected in January. The readings spurred fears that the Fed has enough economic headroom to keep raising interest rates, and drove a recovery rally in the dollar and Treasury yields.

 Silver jumped abruptly on Wednesday, as after the Indian government announced an increase in import taxes on silver and silver dore. The move comes as the Centre aims to align the duty structure with gold, pulling silver imports up to 15% and silver dore to 14.35%.India is the world’s biggest importer of silver.

The basic customs duty on silver was raised to 10% from 7.5% and Agriculture Infrastructure and Development Cess (AIDC) on imports to 5% from 2.5%. Silver dore will carry a 10% basic import duty and 4.35% AIDC.

Local silver prices jumped by up to 4.5% after the duty changes. The import duty on articles made of precious metals was increased to 25% from 22%. There has been no change in import duties on gold.

Adding to this, the US dollar which dropped to nine month low also supported the bullions initially last week.

Technical Levels

Daily price action resulted in formation of long bearish candlestick which is indicating bearish momentum in the near future. However, SILVER Future needs to break its crucial support of 67355 in order to test 66500-65900.

Alternatively, on the upside, immediate resistance is seen at 68320 and a break above will create a probability for pullback. SILVER Future may test immediate resistance 68900-69500.

Overall sentiment will depend on what statement will come out through FED chairmen. Any comments regarding rate hike, could extend recent bearish momentum of bullions.