Silver Approaching $17
It has been a rough week for silver. The metal is down 7.5% and is on track to post its worst week since October 2016. Silver is struggling to stay above the symbolic 17.00 level, which has held since mid-December.
As a precious metal, silver can be considered a safe-haven asset. At the same time, it also has use as an industrial component, and this aspect has sent silver prices sharply lower. For example, silver is found in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. South Korea, another industrial hub for silver, has been hit hard by the coronavirus, as the country’s economic activity has been sapped.
Will Fed Trim Rates in Response to Corona?
Only a few weeks, ago, Federal Reserve policymakers were confidently indicating to the markets that they did not anticipate lowering rates in 2020. However, the devastating economic consequences of the coronavirus may cause the Fed to reconsider this stance.
On Thursday, Chicago Fed President Charles Evans said that the Federal Reserve was paying “close attention” to the outbreak and said that “policymakers must commit to provide extraordinary accommodation in order to meet their mandate.” If the coronavirus spreads in the U.S., the Fed may be forced to cut interest rates.
Silver Technical Analysis
As silver falls, support levels continues to break. The 200-day EMA is situated at 17.10 and is located at the candlesticks. This is immediately followed by the round number of 17.00. Below, we find support at 16.30, which is protecting the 16.00 level. Above, we have resistance at 17.50, with the 50-EMA at 17.81. This is followed by the key line of 18.00.