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Silver Price Forecast: 100-day SMA caps bulls as range tightens
Developing
In Short: Silver prices have stalled near the 100-day Simple Moving Average of $66.39, ending Monday's session with losses.
Silver prices have stalled near the 100-day Simple Moving Average (SMA) of $66.39, ending Monday's trading session with a 0.39% decline as the US dollar strengthened following the Federal Reserve's recent decision.
The white metal is currently consolidating within a range defined by the 100-day SMA at $66.39 and the 50-day SMA at $63.15, indicating a period of limited movement.
Financial markets are experiencing heightened uncertainty and volatility as the third quarter draws to a close, with oil prices falling and European and US stocks poised for a higher open.
Despite the current consolidation, a breach of the 100-day SMA could signal further upward movement for silver.
Silver, a precious metal less popular than gold but still highly traded among investors, is often sought after for diversification and as a hedge during high-inflation periods.
The market structure of successive lower lows and lower highs has been compromised after silver failed to test the August 3 daily low of $56.57, which could have extended losses towards the July 17 swing low of $54.77.
What this adds
The Gold/Silver ratio, which indicates the relative valuation between the two metals, may provide further insights into silver's performance.
Silver's current position near the upper boundary of its trading range suggests that traders are closely monitoring the 100-day SMA for potential breakout signals.
Background
Silver prices have edged up, driven by lower oil prices and a guarded stance from the Federal Reserve.
Oil prices have risen above $100 per barrel, pushing diesel and gasoline prices to record highs, which could impact the economy and consumer spending.
What's still developing
- The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals.
- Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods.