Silver price has eased on its decline; even as it continues on a downtrend. Recession concerns and a strong US dollar will likely continue to pressure the precious metal.
What’s driving the market
A strong US dollar has been one of the bearish drivers in the precious metals market. Amid high bets that the Fed will continue with the aggressive tightening of its monetary policy, the greenback hit a fresh 20-year high in the past week at $109.33. Granted, the subsequent profit-taking mood has boosted silver price and other precious metals.
Earlier in Monday’s session, the dollar index hit an intraday low of $106.93 before bouncing back to $107.35 as at the time of writing. While further easing of greenback’s rallying will yield additional gains for silver price, the currency’s strength is set to persist. With US inflation having hit a 41-year high, more investors forecast that the Fed will approve another super-sized interest rate hike during its July meeting.
At the same time, the ongoing recession concerns have been weighing on silver price based on its status as an industrial metal. The slow down in economic growth is observable in major economies such as Europe, the US, and China.
For instance, data released in the past week showed that the Chinese economy was experiencing the most intense slow down since 2020 as COVID-19 remains a key challenge. As the situation is expected to continue in the short term, the commodity will likely continue on its downtrend in the ensuing sessions.
Silver price technical outlook
Silver price has pulled back after hitting an intraday high of 19.02. As seen on a four-hour chart, it is trading above the 25-day EMA even as it remains below the 50-day EMA.
While further gains are likely in the short term, I expect the precious metal to remain under pressure as the US dollar remains strong. In particular, the range between 19.12 and 18.79 will be worth watching.
Below the range’s lower border, silver price may find short term support at 18.63. Even with the probable volatility, I expect it to remain below the resistance level of 19.41. A move above this level would invalidate this bearish thesis.