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Silver Price Extends Losses as Selling Pressure Persists

6 June 2023

Silver price faced selling pressure for the second successive day on Monday, leading to a further decline in value. The white metal extended its rejection slide from the $24.00 mark, which represents the 38.2% Fibonacci retracement level of the previous downfall in May. The ongoing downtrend keeps silver below the $23.50 level during the early European session, suggesting a potential for additional weakening.

Technically, the decline in silver during the day has broken the key support level at $23.55, which combines the 23.6% Fibonacci level and the 100-period Simple Moving Average (SMA) on the 4-hour chart. Additionally, bearish indicators on both the daily and 4-hour charts confirm the pessimistic outlook, suggesting a potential decline in the near future.

Key Levels to Watch for Potential Upside or Downside Breakout

If the current support levels are decisively broken, silver could potentially test the significant $23.00 level. Following the trend, the region between $22.70 and $22.65, which marked a two-month low in May, would be the next support zone. In the event of sustained selling pressure, the XAG/USD pair might eventually decline to the critical $22.00 mark, where the 200-day SMA plays a crucial role as a pivot point.

On the other hand, to offset the negative outlook, silver would need to demonstrate sustained strength beyond the $23.55 confluence support.

Such a move could pave the way for a fresh attempt to conquer the $24.00 mark. Subsequent resistance levels include the $24.15-$24.20 horizontal resistance zone and the 50% Fibonacci retracement level around $24.45-$24.50.

Silver Price Analysis and Expert Insights

Silver opened on Monday at Rs 71,901 per kg on the MCX, experiencing an intraday low of Rs 71,741. In the international market, silver is currently priced at approximately $23.59 per troy ounce. Last week, gold and silver prices ended on a positive note, with analysts attributing the recovery to profit booking in the dollar index and a positive decision on the US debt ceiling.

Anuj Gupta, Vice President of IIFL Securities, commented on the outlook, stating that gold and silver prices are fundamentally sideways to up. Weakness in the dollar and industrial demand for silver provide support to silver prices. The expectation of a pause in US interest rates may further bolster the bullion. Gupta highlighted key technical levels for gold and silver, suggesting that gold has immediate support at Rs 59,000 and resistance at Rs 60,000. In contrast, silver has immediate support at Rs 70,500 and resistance at Rs 73,000.

Mixed Month for Precious Metals, Recovery Supported by Softening US Dollar

May witnessed lackluster price action in precious metals, with Comex gold and silver ending the month with marginal losses. The strengthening of the US dollar played a significant role in keeping prices under pressure. However, a late recovery was seen due to a softer US dollar. The price of Comex gold reached the anticipated target zone of $1,940-$1,950. Besides, it showed some signs of a potential uptrend resumption towards the immediate target of $2,025-$2,030.

For Comex silver, the price hit the target zone of $23.5-$24 mentioned last month, with a positive short-term outlook and potential rise towards the target zone of $25.5-$26.

In conclusion, silver prices continue to face selling pressure, extending the downward movement for a second consecutive day. Currently, technical indicators point to a negative outlook. However, key support and resistance levels will determine the potential for further decline or an upside breakout. Expert opinions suggest a mixed outlook, with a focus on factors such as the dollar’s strength, industrial demand, and interest rate expectations.


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