Silver Tarnished After Recent Rally
Today’s Spotlight Market
Every April, Silver traders remember the extreme volatility in April of 2011. In early 2011, Silver prices were on a meteoric tear, quickly rising from the mid-$20 range all the way up to near $50. In late April, however, the Silver market was met with a sharp 30% correction. The Silver market is much smaller than the Gold market, and this smaller size tends to exacerbate the extreme price movements that are possible in precious metals markets.
Fundamentals
Although Silver has been in a long-term bear market, there was a brief rally after the March FOMC meeting. This rally proved to be very short-lived, and Silver prices pulled back quickly from the March 26th high of 17.325. Silver prices tend to be inversely correlated with the strength of the US dollar. The US dollar has been choppy over the past month, as traders try to balance economic reports, inflation expectations, and anticipations of Fed rate increases. An improving global economy could help spur an increase in the physical demand for Silver, but price increases may be tempered by a strong dollar as well as lackluster speculation interest. ?
Technical Notes? -? View Today’s Chart
Looking at the continuation chart, there is a pattern of Silver making lower highs with each attempt at a rally. The mid-March closes around 15.5 provide support, while short-term resistance can be found around 17.35. Silver is also currently trading below the 20-day simple moving average, which is a bearish indicator, and the 14-day RSI is at 42, which is neutral.
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