Silver Falls Below Key Average as Investors Flock to Safe Havens
On Monday, spot silver experienced a sharp decline, dropping more than 4.5% and falling below the key 100-day moving average. The price closed at $27.23 per ounce after reaching a session low of $26.49. This significant drop reflects a deteriorating risk appetite amid weak U.S. economic data, as noted by FXStreet analyst Christian Borjon Valencia.
The decline in silver prices is linked to disappointing U.S. economic indicators, including the ISM Manufacturing Purchasing Managers' Index and the nonfarm payrolls report, which have reignited fears of a recession. Investors have been moving towards safe-haven assets like U.S. Treasuries, contributing to the sell-off in silver. The precious metal tumbled after briefly hitting a daily high of $28.67 per ounce.
Jim Wycoff, a senior analyst at Kitco Metals, explained that the market reaction was one of panic, leading investors to liquidate assets across the board, including both gold and silver.
Valencia's analysis suggests that the momentum currently favors sellers, as the Relative Strength Index (RSI) indicates that silver is nearing oversold territory. If silver continues to fall and closes below $27.00 per ounce, the next critical support level would be the 200-day moving average at $26.02 per ounce. Falling below this threshold could lead to further declines, with spot prices potentially reaching the recent cycle low of $24.33 per ounce, last seen on March 27.
Conversely, if buyers manage to push silver prices back up to $28.00 per ounce, the next resistance level would be the August 2 peak at $29.22 per ounce. Surpassing this level could see silver prices moving higher, with additional resistance expected at the 50-day moving average of $29.79 per ounce.
