Silver Pauses at 17.00 – What’s Next?
After showing significant volatility, silver prices have steadied around the $17.00 level. With the coronavirus spreading and causing economic turmoil across the globe, investor risk appetite has been dampened. This has boosted safe-haven assets such as gold and the Japanese yen, but less so silver. The reason? Silver acts as a hybrid – 60% of demand for the metal is for industrial purposes, while only 40% is demand as a safe -haven. If economic conditions continue to deteriorate, industrial demand will also sag, which will weigh on silver prices.
Gold prices punched above the lofty $1700 on Monday, the first time that has happened since 2012. As well, the gold:silver ratio hit an all-time record of 100:1. Silver has been unable to match gold’s impressive gains and has joined the decline seen in stock markets, bond yields and other commodities.
Trump Downplays Corona but Pledges Relief
With the coronavirus threatening to unleash economic turmoil in the United States, which is the world’s largest economy, President Trump has announced some measures aimed at providing financial relief. On Monday, Trump said he will propose a temporary payroll tax cut as well as paid leave for hourly workers who cannot work due to the outbreak. If the spread of the virus intensifies, there will be pressure on the government to implement fiscal stimulus measures, such as relief for small businesses and industries hard-hit by the virus.
Silver Technical Analysis
The 200-EMA is situated at 17.10, just above the pair. The line of 17.50 is the next resistance line, followed closely by the 50-EMA at 17.63. Above, the round number of 18.00 is a key resistance level with psychological significance. On the downside, there is immediate support at 16.90, with the next support line at 16.30.