Quick Look:
- Silver (XAG) prices dropped sharply to $26.85, down 1.27%.
- Technical indicators suggest a possible further decline to $26.
- Market influenced by global events and potential US rate cuts.
Silver prices continue to face significant pressure in an increasingly volatile market environment. The precious metal experienced a sharp drop in early trading on Monday, with prices falling by 4.5%. It ultimately closed at $26.85 per troy ounce, representing a 1.27% decrease from the previous day’s closing price of $27.20.
Silver Could Hit $26, Technicals Suggest A Decline
Analysts are watching closely for further price declines, with key technical indicators suggesting that prices might drop to the $26 level. This level previously served as resistance and could now act as a support zone. Should the price breakdown occur, this level may serve as a crucial buying point for investors. Conversely, if a rebound initiates, XAG could face significant resistance around $28.50, a level previously noted as a substantial barrier, with further resistance looming at $30.
Today’s trading range is projected between $26.40 and $27.10. Despite a year-to-date increase of 5.42% in prices, the trend remains bearish. Broader economic indicators and geopolitical developments influence the market’s sentiment.
Gold-Silver Ratio at 85.78, Silver Devalues Against Gold
A key investor metric, the Gold-Silver Ratio, currently stands at 85.78, indicating that more XAG is required to purchase an equivalent amount of gold compared to earlier figures (85.57 on Monday). This shift suggests a relative devaluation of silver against gold.
Regarding global market influences, the Comex silver price currently sits at $26.95, with recent corrections largely attributed to decreased geopolitical tensions following the Middle East de-escalation. Comments from the Iranian Foreign Minister about not responding to an Israeli strike have notably improved market sentiment.
Furthermore, speculation around US Federal Reserve rate cuts continues to stir the market. With a 15% probability of a rate cut in June, escalating to under 70% by September, these speculations could significantly impact silver’s valuation in the coming months.
Analysts Debate Silver’s Viability as Long-Term Investment
Market experts have highlighted the inherent challenges of trading silver, often labelling it as a volatile asset. Although some view the recent price pullback as a potential buying opportunity, there is uncertainty about whether silver is a suitable long-term investment.
As investors navigate these turbulent waters, the silver market remains a complex landscape influenced by technical indicators, economic fundamentals, and geopolitical events. The coming weeks are crucial as market participants watch for signs of a further downturn or a potential recovery in silver prices.