- Silver has gone back and forth during the trading session on Tuesday, as we continue to hang around the $24.50 level.
- The $24.50 level is an area that has previously offered resistance and now offers a significant amount of support.
- All things being equal, this is a market that I think will continue to move on massive external pressures, not the least of which would be industrial demand.
That being said, the area that we are in right now also reflects the idea that perhaps central banks loosening monetary policy around the world will continue to drive precious metals higher. However, it's worth noting that silver is not gold and therefore it doesn't react quite the same to that influence.
Keep in mind that silver tends to be “its own animal” at times, as it is much more volatile than gold, and although the two metals tend to move in the same overall direction, one will typically outperform the other, depending on the macroeconomic situation we find ourselves in. At the moment, I am much more bullish of gold than silver, as it is far too noisy, and has been manipulated quite successfully multiple times in the last few years.
Interest Rates and More…
Interest rates in America and other places dropping will make precious metals more attractive, but it's also worth noting that recently the commitment of traders report has suggested that commercials are massively net short that typically means bad things for a market. It's also worth noting that the $26 level above is a massive resistance barrier and I think it's going to be very difficult to break above there. If we do, it will kick off a lot of stops, and of course, we'll have a lot of short covering following. In general, I think this is a market that's going to try to stabilize in this area, and we may see a lot of back and forth trading more than anything else. If we do break down below the $24.50 level, then the 50-day EMA will come into focus as a potential target for short sellers.
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