Tough Time for Silver

It’s been a tricky time recently for silver traders. Following the heavy sell off seen across May, the market has since stabilised with price now sitting around 5% higher off the May lows. However, the move has been laboured and seen plenty of volatility making it difficult to gauge if this is the start of a fresh leg higher within the longer bull trend, or merely a correction to the sell off over May before we turn lower again.

Worries Over Higher Rates

On the one hand, a weaker USD post-Fed is certainly helping lift the near-term outlook for metals. However, with the Fed signalling that further hikes might still be likely after pausing this month, and with the ECB still firmly hawkish, traders are wary of higher rates and the impact that has on demand. With this in mind, silver looks likely to continue to trade in a choppy range for now. Looking further out, should the Fed turn more neutral on rates, this would likely help lift prices and drive a fresh rally higher. However, any surprise uptick in inflation will bolster hawkish Fed expectations, pushing USD higher and weighing on metals near-term.

Technical Views

Silver

For now, the move lower in silver has been underpinned by the retest of the broken bear trend line. However, price is currently struggling to move back above the 24.0073 level which is the key near-term pivot to watch. Above here, focus turns back to 26.0974 next.