Silver price has been hovering around $22.50 since the beginning of October. A strong US dollar is the key underlying driver of the precious metal’s subtle movements.
US dollar vs. precious metals
Typically, the value of the greenback is inversely correlated to that of precious metals. Since the beginning of the month, the dollar index, which tracks the value of the US dollar against a basket of six currencies, has been trading steadily above September’s major resistance level of $93.50.
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As a reaction to the strong dollar environment, silver price has lacked enough bullish momentum to retest the support-turn-resistance level of $23.00. At the same time, gold price is finding support at $1,750 as the crucial level of $1,800 remains an evasive one.
Investors are now keen on the nonfarm payroll data schedule for Friday. The figures come at a time when inflation concerns and anticipated interest rate hikes are heightening the greenback’s safe-haven appeal.
On the one hand, precious metals’ status as a hedge against inflation and safe-haven has offered support to these commodities. However, the risk aversion appears to be driving investors more towards the US dollar. Besides, the rising Treasury yields are offering support to the greenback; further weighing on precious metals.
Silver price technical outlook
Silver price remains above the crucial support level of 22.00 as has been the case since the beginning of the month. However, it lacks enough bullish momentum to reach and move past the support-turn-resistance level of 23.00.
Indeed, over the past three weeks, the precious metal has been trading within a horizontal channel of between 22.00 and 22.97. Granted, it dropped below the channel’s lower border late last month before bouncing back to the aforementioned range.
At the time of writing, silver priced was down by 0.50% at 22.51. Since the beginning of October, it has been hovering around 22.50. On a four-hour chart, it is trading slightly above the 25 and 50-day EMA.
In the short term, silver price will likely hover around 22.50 ahead of Friday’s US jobs data. A move below the support zone at 22.48, which is along the 25-day EMA will place the support level at Wednesday’s low of 22.21 or lower at the psychological level of 22.00. On the flip side, the bulls may manage to push the price to the horizontal channel’s upper border at 22.97.
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