Silver prices edged lower following Monday’s flash crash that saw prices drop nearly $1 per ounce. The dollar moved higher, and the Euro moved lower following a softer than expected German Zew survey. The yield differential moved in favor of the greenback as U.S. yields continue to rise ahead of this week’s inflation data. Later in the week, investors will need to evaluate CPI, PPI, and import prices.
Technical analysis
Silver prices edged lower and remain under pressure following Monday’s flash crash. Target support is seen near the November 2020 lows 21.87. Resistance is seen near former support at the March lows at 24.41. Short-term momentum has turned negative as the fast stochastic generated crossover sell signal. 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). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.
Inflation Data Expected This Week
There is a deluge of U.S. inflation data scheduled to be released on Wednesday, Thursday and Friday. Consumer prices, Producer Prices, and import prices should show that inflation remains elevated in the United States. Last week the Labor Department reported that wage inflation in the U.S. has increased 4% year over year. Stronger than anticipated inflation data will likely put upward pressure on U.S. yields and buoy the dollar. Since Silver is priced in U.S. dollars, a stronger dollar will weigh on Silver.