Silver dropped steadily overnight, falling under last month's low of $55.50 to hit a fresh cycle low of $54.77. That was its lowest level since late November, prior to the parabolic surge which took it to a record high above $121 two months later.
Silver is struggling to make any headway for all the same reasons as gold. This week's softer US inflation data has reduced expectations of near-term Federal Reserve tightening. This triggered a sharp selloff in the US dollar and a rally in precious metals. But the failure to break to the upside suggests that precious metals may still have further to fall before they can find a base.
The trouble is that surging crude oil prices on the back of rising geopolitical tensions have revived concerns about energy-driven inflation, potentially requiring central banks to keep interest rates elevated. That is supporting the dollar, which, in the current environment, is undermining the case for buying silver. But it is approaching an area which may offer some support. The only trouble is that this area stretches down below $50 per ounce.
Nevertheless, silver has been correcting downwards for five and a half months now, so the selling is getting quite stretched. But it is only when the sellers have exhausted themselves that the bulls will have an opportunity to take back control. When, or where, that might happen, is far from clear.
Source: TN Trader
* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.
