Silver Tests The Support At $23.25
Silver fell below the support level at $24.00 and is testing the next support level at $23.25 as gold pulled back from record highs while gold/silver ratio rebounded above 83.
Gold has declined closer to the $1950 level as some traders started to take their profits after the major rally. Yesterday’s Fed commentary put pressure on the global markets so some market participants may want to raise more cash.
Gold/silver ratio continued its rebound and is trying to settle above the 84 level. This is an important resistance level for gold/silver ratio, and a move above 84 will open the way to the test of the 20 EMA level at 88.40. This scenario will be bearish for silver.
Meanwhile, the U.S. dollar is flat against a broad basket of currencies. The U.S. Dollar Index made an attempt to settle above 93.5 but failed to gain more upside momentum and declined closer to recent lows.
Additional weakness of the U.S. dollar will be bullish for silver and other precious metals as it will make them cheaper for buyers who have other currencies.
However, I’d note that U.S. Dollar Index is in the oversold territory and the risk of a rebound is still significant.
Silver has made an attempt to settle below the support level at $23.25 but this attempt was not successful so silver stays in the range between the previous support at $24.00 and support at $23.25.
RSI is returning to more normal levels so silver may develop additional upside momentum in case the right catalysts emerge. At this point, an additional U.S. dollar weakness may serve as a catalyst that may support silver.
In case silver settles below the support at $23.25, it will head towards the next support level at $22.30. A move below this level will signal that the current upside momentum has come to an end. In this scenario, silver will decline towards the 20 EMA at $21.30.
On the upside, silver will likely face some resistance at the previous support level at $24.00. If silver manages to get above this level, it will head towards the next resistance level at $24.95. A move above $24.95 will likely provide silver with an opportunity to test the recent highs at $26.20.
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