Silver Price Prediction – Prices Drop Sharply Breaking Through Key Support
Silver prices broke down as the dollar surged to fresh 12-month highs. The yield differential between the U.S. and Europe continued to widen in favor of the greenback. Since silver is quoted in dollars, a stronger dollar generally weighs on silver prices. Gold also moved lower, putting downward pressure on the entire precious metals complex. Business conditions for restaurants and bars are weakening in September which is not a good sign as the delta variant continues to spread.
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Technical Analysis
Silver prices tumbled on Wednesday, breaking through horizontal trend support and poised to test lower levels. Target support are the June 2020 lows at 16.25. Resistance on silver prices are seen near the recent breakdown level at 22.10. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 3, well below the oversold trigger level of 20 foreshadowings a correction. The RSI is printing a reading of 29 which is also an oversold reading. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a downward sloping trajectory which points to lower prices.
New Housing Contracts Surge
Pending home sales to purchase existing homes increased 8.1% month to month in August. Analysts were expecting a 1% monthly rise. Signings were still down 8.3% compared with August 2020. August’s increase followed two months of declines. These so-called pending home sales are a future indicator of signed contracts in one to two months.