Silver Technical Analysis – $20.00 Calling

Silver prices remain under significant downside pressure due to the Federal Reserve’s imminent move to raise interest rates by 50 basis points this week, and the potential for further aggressive action from the US central bank.

Silver has been a serious underperformer in the last two weeks as prices dropped below towards $23.00, as gold crumbles, and the China slowdown from COVID-19 dents global growth.

Analysts at UBS expect to see lower silver prices in the near-term which is a concern, the demand on May and June silver futures contracts also provides a compelling case for further downside.

Interestingly, the Swiss investment bank is negative on silver as the Federal Reserve tries to get inflation under control by aggressively raising interest rates. They added that interest rates have room to move much higher through 2022.

UBS strategist recently said in a report “Prospects of higher interest rates are likely to remain a headwind for the metal,” said. “A silver price whose upside is likely to be capped gives investors the opportunity to engage in more active strategies.”

Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 89 percent of traders are bullish towards silver.          

With this strong way sentiment bias it is not bullish for silver price as retail have gone crazy on the buy side, and not for the first time, which could hint at more steep correction for silver price ahead.