Metals Reversing Lower

Silver prices have come under heavy selling pressure today, extending losses amidst the reversal from yesterday’s highs. The move lower has been heavily influenced by the downturn in gold prices as USD rallies in response to the US/Israel conflict with Iran. Escalating violence fears of a drawn-out operation (including the risk of US troops on the ground) is driving strong safe-haven demand for the Dollar this week. Additionally, a shift in traders’ Fed expectations is also pushing USD higher with traders now scaling back Fed easing expectations in coming months as a result of soaring energy prices.

Bullish USD Picture

Supply risks linked to war in the Middle East are well understood and crude prices are now trading at fresh multi-month highs and look poised for further upside. Against this backdrop, traders are no longer pricing in a Fed cut until July (and even that pricing is very marginal). If the conflict steps up further (US troop son ground worse scenario, or terror attack on US soil) silver is at risk of a much deeper reversal as USD continues to push higher.

Technical Views

Silver

The rally in silver has stalled for now into the 95.5169 level with price since reversing heavily lower. With momentum studies now turned down also, risks of a further move lower are seen. Near-term, 70.5985 will be the key support to watch with the picture turning much darker for bulls if that support level is broken.