The price of Silver seems to be in the process of consolidation around the $25.00 mark as traders await the outcome of this week’s key interest rate decision from the US Federal Reserve.
Silver is marginally under pressure as gold pulled back towards the $1980 level as Treasury yields continued to rebound. The US dollar moved higher against a broad basket of currencies, putting additional pressure on gold markets.
Gold and silver have a strong price correlation. Precious metals like gold have moved sharply higher this SVB and Silvergate bank drama, which has caused investors to reconsider well to store their wealth if bank failures happen.
The First Republic bankruptcy is another reason why silver has retained its bid tone, however, if the Fed do signal more than 2 or 3 rate hikes down the pipeline this week it could pressure silver prices.
On the flip side, silver could still play catch up in the second quarter to gold prices. Silver and gold usually share a strong price correlation due to the safe haven status of both metals and their correlation with the greenback.
Current sentiment metric towards silver show that traders are turning less bullish towards the price of silver. The ActivTrader market sentiment tool shows that 53 percent of traders are bullish towards silver.
There had been a strong bull sentiment bias for silver price as retail have been heavily leaning on the buy side and may have been squeezed during the early month dip. In my opinion this neutral tilt is very bullish.
Silver short-term Technical Analysis
The short-term technicals for the shiny-metal shows that silver has reversed to the upside and is testing back towards the neckline if a head and shoulders price pattern.
Looking more closely at the size of the head and shoulders price pattern and overall measuring the pattern, we are probably going to see a breakout in the region of $1.50 at some point. Taking silver towards $23.50.
Silver Medium-term Technical Analysis
The daily chart shows that silver price is in good shape over the medium-term horizon while the price holds above its 200-day moving average, close to $22.50.
The Ichimoku indicator is also flashing a daily buy signal, so we need to be careful with selling silver. The Ichimoku cloud is thick, meaning the buy trend is still strong for silver.