Silver Prices Remain Capped as Markets Are Subdued

Key Insights

• Silver prices stabilized near 25.50 amid winding down conditions ahead of the weekend

• The dollar eased due to aggressive rate hike expectations

• U.S. Benchmark Treasury yields surged amid more aggressive Fed policy

• Oil prices slid amid reduced supply concerns as Russian exports are expected to resume

Silver prices remain little changed on Friday as aggressive Fed policy lessens the safe-haven asset’s appeal. U.S. benchmark yields surged due to expectations for rate hikes of over 25 basis points to combat inflation. The 10-year yield reached a two-year high, increasing by 11 basis points in today’s trading session. The dollar eased due to expectations for rate increases, while the Euro strengthened. Oil prices fell due to easing supply concerns. Exports may resume from the CPC terminal. However, the E.U. remains undecided about imposing an oil embargo given their heavy reliance on Russia for oil.

In February, U.S. Pending Home Sales decreased by 4.1%, declining for the fourth consecutive month. Pending home sales are a future-looking indicator on home sales one or two months out based on contract signings. Sales fell by 5.40% from February 2021. Increasing mortgage rates, which began in January and continued to rise in February, caused the fall in pending home sales. The 30-year fixed-rate mortgage climbed 73 basis points from December 2021 to February 2022. Additionally, the medium monthly payment is taking up more of a consumer’s income. As spring is typically a busy time for home buying, the spike in rates is coming at a suboptimal time.

Technical Analysis

Silver prices hover near 25.4, and price action is capped by 26.000. The break above the 10-day moving average of 25.18 could signal a near-term rally. However, selling pressure ahead of 26.000 will act as a ceiling for price action,

Support is near the 10-day moving average near 25.14. Resistance is seen near the downward sloping trendline near 26.0. Short-term momentum is positive, but momentum is decelerating, as the fast stochastic had a crossover buy signal but is converging.

Story continues

The medium-term momentum is negative as the histogram prints negatively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory but decelerating, which reflects the upward trend in price movement.

This article was originally posted on FX Empire

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