Silver is one of the most precious metals, one investors actively trade on. Newly public, it has trended all over the place while emerging from an unpredictable market landscape. Silver is heavily consumed across almost all industrial sectors, in particular electronics and solar energy. It occupies a special place, largely due to the fact that it has the highest electrical conductivity of all metals, exceeding copper and even gold. The other precious metal is feeling the squeeze right now. It’s trading below important moving averages and it looks like this too is being hit by the broad economic malaise.
On Thursday, silver (XAG/USD) jumped once again to close to $32.00 in the early European trading hours. This recovery came after bouncing from a daily low of about $31.65 earlier that very day. While a short-term bounce may ensue, the mood remains very much negative. The price is still fighting a bullish trendline. The price is still trading below the 20-period EMA, which is right now at $32.70.
Current Market Trends
Silver’s astonishing volatility recently is representative of the whole market’s fear, thirst, and egregious panic. The 14-period Relative Strength Index (RSI) for silver currently rests at 40.00. This somewhat tenuous position means the metal is on the cusp of a more bearish momentum. Should the RSI fall below the key 40.00 level, it may trigger additional losses in silver prices.
Among players in the markets, traders are especially focused on what economic news might come next. Leading into Federal Reserve Chair Jerome Powell’s speaking engagement being the main driver behind silver price dynamics. The anticipation surrounding Powell’s statements adds an element of uncertainty to the market, which is already grappling with shifting economic indicators.
“We are going into a series of negotiations with China to prevent escalation again.” – Scott Bessent
Such a statement would surely underscore the current delicate nature of US-China relations. These tensions may have important ramifications for safe-haven assets, including silver. Evidence of thawing trade relations between the world’s two biggest economies has recently bubbled up. Consequently, the allure of silver as a hedge haven remains less attractive in part.
Impact of US-China Trade Relations
Recent moves in the US-China trade relationship serve as a crucial catalyst that has directly informed silver prices. China made a limited but notable concession by suspending non-tariff barriers on 45 US companies. This agreement is seen as a significant breakthrough towards thawing relations between the two countries. Better trade relations often lead to an increase in investor confidence and therefore lower the need for safe-haven assets like silver.
The diplomatic undertones of these efforts can’t be overstated. The upshot is that as relations thaw, investors could have greater confidence. This may cause them to pull back from silver, adding downward pressure on its price. The $34.60 high from March 28 provides the first important silver resistance overhead. On the downside, the April 11 low of $30.90 is a key support area that traders will be closely monitoring for a bullish signal.
Perceptions of economic conditions in the US, China, and India impact silver prices significantly. The sum total of their interactions can produce enormous volatility in the market. The ability for each country to perform economically will have a direct impact on the demand and supply dynamic of silver in all its sectors.
Technical Analysis and Future Outlook
From the technical standpoint, the outlook for silver is bearish at this time. Fall trading pattern indicates lack of upside momentum overall, particularly as silver continues to trade under key moving averages. The historical pattern suggests that unless some major force comes to raise prices, silver will likely continue to falter.
The Gold/Silver ratio can be a great tool in understanding what’s going on with the relative valuation between gold and silver. A rising ratio means that silver is undervalued compared to gold, which can create profitable buying opportunities for intelligent investors. With a softening market and increasing correlation with other economic indicators, we continue to advocate caution.
As all silver traders continue to assess silver’s future course, they will want to pay close attention to technical factors and overall economic conditions. Silver prices are on the razor’s edge at the moment. Indeed, any abrupt change in market sentiment or US economic policy will trigger steep movements.