Original title: Silver recovery and rebound facing “headwind”!U.S. bond yield signals are blurred
FX168 Financial News (Hong Kong) reported that silver prices are ready for signs of recovery and rebound. They are currently hovering higher around US$25.28, but the market outlook is still facing headwind challenges.The dollar’s decline failed to boostGold price, But it supports the upward trend line of silver prices. As the market’s concerns about the renewed wave of the new crown variant strains are slightly dissipated, copper prices have regained their footing, and silver prices that provide strong industrial demand have also been assisted. After the auction of the US 20-year Treasury bonds, U.S. bond yields have been mixed, and yields need to rise to have momentum to attract buyers.
The U.S. Congressional Budget Office (CBO) warned that if Congress does not take action to raise the debt ceiling, the United States will face the risk of debt default in October or November. The U.S. Senate voted on the cross-party US$1.2 trillion infrastructure construction plan, hoping to initiate a debate on the bill under preparation, but was opposed by the Republican Party, demanding to know the details of the bill and the source of funding.
The global new crown pneumonia epidemic continues to spread. Although doubts about the prospect of economic recovery have diminished, it is still inevitable that the number of confirmed cases worldwide has exceeded 191.7 million, and the number of deaths has soared to a record of 4.123 million. The United States has confirmed more than 34.2 million cases, India has confirmed more than 31.21 million cases, and Brazil has confirmed 19.41 million cases.
In the United States, 83% of the newly diagnosed infections of the Indian Delta variant strain have increased sharply from 50% at the beginning of the month. White House epidemic prevention expert Anthony Fauci said that people who have received two doses of the vaccine are still at risk of contracting the disease and are already complete. Those vaccinated should consider wearing masks indoors to improve their protection.
What is noteworthy in analyst comments is that in a customer report released by Commerzbank precious metals analyst Carsten Fritsch, silver appears to be oversold. He explained: “At present, concerns about the re-imposition of economic restrictions in response to the spread of the Delta variant virus seem to be more serious. This will also affect the demand for silver by industry, which accounts for half of the total demand for silver. We believe these concerns are exaggerated and we expect silver prices to recover soon.”
Silver/USD confirmed a bearish breakthrough this week, breaking through the US$25.70 to US$25.65 confluence support zone, including the very important 200-day moving average and the 61.8% Fibonacci retracement level of the rise from US$23.78 to US$28.75. Part of the subsequent sell-off dragged the price of silver to a one-month volatility low of approximately US$25.50 and below the US$25 threshold, increasing confidence in its negative outlook.
Having said that, there will be some bargain hunting above the support level of 24.70 to 24.65. It is worthwhile for active bearish traders to proceed with caution. It seems likely that silver/dollar will continue to extend the downward trajectory to the round threshold of 24 dollars, and then eventually fall to the lows of the year near the area of āā23.80 to 23.75 dollars.
On the other hand, any meaningful attempt to rebound may be regarded as a selling opportunity, and it may quickly fade away near the above-mentioned confluence of US$25.70 to US$25.65. Next is the integer threshold of 26 US dollars. Breaking through this threshold may extend to the important resistance zone of 26.40 to 26.50 US dollars.
FXEmpire analyst David Becker pointed out that silver prices rebounded on Wednesday after falling below the support of the trend line earlier this week. The lower dollar failed to boost gold prices, but as concerns about the spread of the virus disappeared slightly, copper prices gained a foothold. Silver price target support is located near the horizontal line near 23.86 US dollars, resistance is located at the previous support near 25.55 US dollars, and additional resistance is seen near the 20-day moving average of 25.95 US dollars.
Since the fast stochastic indicator generates a cross-buy signal, the short-term momentum has turned positive. The fast stochastic indicator has risen from a reading of 6, to 22 above the oversold trigger level of 20, reflecting positive momentum. As the MACD generated a cross-sell signal, the medium-term momentum turned negative. The MACD histogram is printed in the negative area, and the sliding track points to a lower price.
Another analyst, Christopher Lewis, mentioned that if it can break through the 200-day moving average, then silver may look to the 50-day moving average. But on the other hand, if you want to reverse the low point of the past few trading days, it may start a more intense sell-off, and may even push silver to the level of $25. $25 is a huge, comprehensive, and psychologically significant number, so you need to see that level stay the same.
If not, then the silver market will begin to experience quite negative events, opening the possibility of a long-term downtrend. The market breaks through last week’s high and may begin to try to return to the gap above, which is the $27.75 level. In any case, Lewis believes that one thing investors should do is to pay close attention to overall risk appetite, and possibly even the dollar index and its impact on this market.
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