Silver price witnessed more than four percent fall last week. Prices approached the one-month low of as markets gauged future demand amid underwhelming stimulus from China and the higher rate outlook in the US.
The Chinese government announced a package of $1.4 trillion for local governments to swap off-balance sheet debt with Beijing and improve future financing costs, but refrained from announcing new flows of stimulus to specifically target the weak consumption in the economy.
This hampered the outlook for industrial metals across all sectors, pressuring silver due to its high usage in electrification, specifically solar panels.
Additionally, Chinese-owned solar panel companies reportedly started to cut production after Trump’s election victory in the US threatened higher tariffs in the sector.
Trump’s victory also pressured silver by raising the outlook on interest rates as the Fed is expected to keep borrowing costs high to offset expansionary fiscal policy in the upcoming administration.
“This rally in the dollar and yields has put pressure on gold, which traditionally falls as real interest rates rise, reflecting reduced demand for safe-haven assets in the short term
The upbeat US economic data on Friday contributes to the USD’s upside. The US Consumer Sentiment Index rose to 73.0 in November from 70.5 in October, according to the preliminary reading by the University of Michigan. This figure came in better than the market expectation of 71.0.
On the other hand, the global economic uncertainty and the ongoing geopolitical tensions in the Middle East weighted on the prices.
Technical Outlook – Silver Price
Silver prices continued to trade under pressure after reaching a peak of 100081 on October 23, retreating toward the previous week’s low of 90036, marking a decline of over 6%. On Friday, prices fell by 1.13%, settling at 91269 compared to the previous day’s close of 92313.
The wave count on the chart indicates that, after completing an impulsive 1-5 wave structure, prices have entered an ABC corrective wave. The recent pullback is likely wave A, and prices are expected to recover toward the 93500-96700 range.
Alternatively, a break below 88250 would confirm a failed reversal, potentially leading to a sharp decline toward 86900-85800 in the near future.
Hence, Any dip toward 90500-89600 is expected to find support in the near term, unless it gives a closing below 88250.00
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Also Read: Markets Watch CPI as Trump’s Election Win Shakes Things Up , Forex Focus: Powell Resists Resignation Amid Tensions
Recommended Read: The Finale of the US Elections 2024: What Lies Ahead for the Commodities Market?
Want Help On Your Trades ?
Chat with RM