Strong Consumer Confidence Sends Silver Reeling

Published: Jan 29, 2020, 11:42 UTC•2min read

Silver prices have fallen to a 5-week low, after a sparkling consumer confidence report sent the metal sharply lower.

Silver Slides as Risk Appetite Rebounds

Silver prices took a plunge on Tuesday, falling 3.4 percent. This marked the sharpest one-day drop since September. The catalyst for the slide was a sparkling CB Consumer Confidence in January of 131.6, up from 128.2 a month earlier. This figure beat the forecast of 128.2 points. Consumer confidence has built off a solid retail sales report in December and this bodes well for the U.S. economy early in 2020. The consumer confidence report has increased risk appetite and weighed on silver and gold prices, as stronger consumer confidence should translate into stronger consumer spending.

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Investors Await Fed Rate Statement

All eyes are on the Federal Reserve which wraps up its monthly policy meeting later on Wednesday. The Fed is widely expected to stand pat and maintain the benchmark rate, as the CME Group has projected an 89% likelihood that policymakers will maintain current rate levels. The Fed appears content with current economic conditions, which means that we’re unlikely to see any interest rate moves in the near future. Investors will be keeping a close eye on the rate statement, as the tone of the statement could affect market movement. The Federal Reserve is expected to reassure investors that it is carefully monitoring the China coronavirus and tensions with Iran.

Silver Technical Analysis

After hovering close to the 18.00 since December, silver dropped sharply on Tuesday and broke through support barriers. This included the 50-EMA at 17.66 and a support line at 17.50. Silver prices fell even lower in Wednesday’s Asian session, dropping to 17.33, before recovering and climbing just above the 17.50 line. If the 17.50 line breaks, silver has room to fall to the round number of 17.00. On the upside, there is resistance at 18.00, followed by resistance at 18.60.

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