Silver prices dropped sharply on Monday following a robust decline on Friday. The dollar edged higher, weighing on silver and generating headwinds for the entire precious metals complex. U.S. Yields moved lower as investors moved into safe-haven assets. The Home Builders index edged slightly lower, which paved the way for lower yields.
Technical analysis
Silver prices dropped sharply on Monday for the second consecutive trading position slicing through trend line support and headed to a horizontal support line seen near 25.55. A break of this level would lead to a test of the March lows at 23.86. Resistance is seen near the 20-day moving average at 20.02. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic has moved lower, printing a reading of 6, well below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
U.S. Homebuilder Buyer Traffic Dropped
The combination of higher construction costs and the spread of the delta variant of COVID eroded Homebuilder confidence. The National Association of Home Builders dropped 1 point to 80 in July. The index stood at 72 in July 2020. The index hit a record high of 90 in November of last year.While lumber prices have fallen by more than 50% in the lumber futures market, those savings have not yet trickled down to builders, remodelers or consumers.