Silver prices have been on a miraculous return, nearly reaching $32.50 at one point on Thursday North American trading hours. This rise happens even despite the comparatively bullish stance of the US Dollar. Earlier today silver hit a new 2-week low of $31.66. It rebounded and gained back most of its initial losses. This rebound occurs amid a growing cacophony that has market participants watching and waiting for economic data and geopolitical events to drive the price of gold.
Silver’s inability to return to its more than three-week high of just under $33.70 puts some doubt on its near-term bullish picture. Declining under the 20-day Exponential Moving Average (EMA) trading near $32.65 has created a volatility factor for investors. The silver market is closely watching key support levels, particularly the April 11 low of $30.90, which could play a crucial role in determining future price movements.
Market Dynamics Influence Silver Prices
In spite of the US Dollar’s ongoing strength, the white metal hasn’t squandered its recovery from last month’s deep loss. The ISM Manufacturing PMI data released yesterday confirms the slowdown in April’s manufacturing activities at a sharper rate. Second, the ISM Manufacturing Prices Paid index has increased to 69.8 (69.4). Yet, it underperformed, as the anticipation ahead of the data had called for 70.3. This uncertain economic situation creates both risks and potential rewards for silver traders.
“Initial trade deals are to be announced in weeks, not months,” stated US Trade Representative Jamieson Greer. As a result, this announcement should provide a big shot of optimism into the market. With trade uncertainty between the US and China ongoing, this would be positive for silver prices as well.
Adding further complexity to silver’s price dynamics is the deepening interplay between the economies of the US, China, and India. According to analysts, news from these countries has the potential to create massive price fluctuations. These oscillations are sure to impact industrial demand, as well as the overall investment sentiment in silver.
Technical Indicators Point to Caution
With silver prices fluctuating around $32.50, technical indicators show that investors are on the defensive. Moreover, the 14-day Relative Strength Index (RSI) has crossed below the key level of 50.00. This drop follows its inability to break above 60.00, a move that indicates a generally bearish outlook on the market. This implies that traders could be unwilling to take the short-term bullish silver bets.
Moving forward, the March 28 high of $34.60 remains an important resistance level for silver prices. A very basic signal that could point to a recovery trend is hitting or exceeding this threshold. Conversely, not moving could intensify bearish sentiment among traders.
The Gold/Silver ratio is an important barometer. It shows how many ounces of silver you must have to equal the value of one ounce of gold and allows you to assess the relative value of each metal. Traders watch this ratio like a hawk because it has the power to reveal trending markets and shifting investor sentiment.
Industrial Demand Remains Steady
Silver has unique properties which allow it to be used in many different industries. Its exceptional electrical conductivity exceeds even that of copper and gold, rendering it especially precious for electronics and solar energy applications. This industrial demand is a big support factor for silver prices, even during more uncertain economic times.
Recent volatility hasn’t shaken the optimism of many analysts, who maintain a bullish long-term outlook for silver. Above all, they share our belief in silver’s indispensable role in technology and the renewable energy sectors. As global economies recover from the pandemic and inflationary shocks, such a recovery would significantly increase industrial demand for silver, providing a potential backstop against plunging prices.