Silver price under pressure despite the risk-off sentiment

By: Faith Maina
Faith Maina
Faith strives to break down complex developments so investors can make better informed decisions. When Faith is not immersed… read more.
on Nov 28, 2021
  • Silver price has been under pressure over the past week despite the risk-off sentiment.
  • The fear & greed index has shifted to the fear end of the spectrum.
  • In the new week, focus is on manufacturing PMIs, nonfarm payrolls, and Fed policymakers' speeches.

Silver price extended the week’s losses in Friday’s session despite the risk-off market sentiment. In the coming week, focus will be on Fed policymakers’ remarks and data related to its industrial and precious metal status.

Market mood

The fear & greed index shifted from a greed level of 64 to the fear end of the spectrum. On Friday, the index’s reading was at 31. Both the market volatility and safe-haven demand are exhibiting extreme fear. Usually, risk aversion boosts precious metals based on their safe-haven status.

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However, a strengthening US dollar is exerting pressure on silver price. Concerns over the new wave of COVID-19, coupled with positive economic data from the US, boosted the dollar index to its highest level since July 2020. Besides, slowed growth of the Chinese economy has raised concerns over silver’s industrial demand.

In the new week, silver price will be reacting to manufacturing PMI from China and other economies. Besides, investors will be keen on Jerome Powell’s testimony as well as speeches from various Fed policymakers. The speeches come a few days after Fed meeting minutes that exuded a hawkish tone. The nonfarm payrolls data scheduled for Friday will further influence the metal’s price movements.

Silver price technical outlook

Silver price has been under pressure over the past week. The week’s losses defined a trend reversal after the precious metal hit a four-month high in the previous week. Since Monday, it has dropped by about 6.89%.

The precious metal ended the week at 23.17; down by 1.83%. On a four-hour chart, it is trading below the 25 and 50-day exponential moving averages. Besides, with an RSI of 26, it is in the overbought territory.

In the coming week, I expect silver price to remain under pressure amid the strengthening US dollar. However, it may begin the week on a corrective rebound as it finds support along the psychological level of 23.00.

It may bounce back to find resistance along the 25-day EMA at 23.72. Subsequently, it may trade within the formed horizontal channel with 23.16 and 23.72 as the lower and upper borders respectively. Above the aforementioned resistance level, the bulls will be eyeing the 50-day EMA at 24.03. On the flip side, a move below Friday’s low of 22.94 will likely place the support zone at 22.35.

silver price
silver price
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