Silver Video 21.05.20.
Silver Loses Ground Together With Other Precious Metals
Yesterday, silver tested the resistance level at $17.50 but failed to settle above it. As I noted in my previous article, RSI was in the overbought territory while gold/silver ratio was in the oversold territory, which meant that silver was poised to experience some resistance on its way up.
Gold is also in a pullback mode, putting pressure on silver. In addition, gold/silver ratio is rebounding from the 100 level. Gold/silver ratio declined from 109 to 100 without any pullback so it’s not surprising to see an uptick on this front.
The U.S. Dollar Index continues to stay above the key 99 level after the release of the U.S. Initial Jobless Claims report which showed that 2.4 million Americans filed for unemployment benefits in a week.
The job data looks grim as Continuing Jobless Claims report showed that 25 million Americans were still out of jobs (this data lags Initial Jobless Claims by one week).
It remains to be seen whether the grim picture on the job front will provide support to the U.S. dollar or boost precious metals which have recently enjoyed material upside as investors searched for protective bets as the U.S. stock market was getting increasingly expensive.
The $17.50 level proved to be a material resistance level for silver while high RSI and oversold gold/silver ratio served as additional catalysts for a pullback.
Now, silver will have to deal with the $17.50 level to continue its upside move. In case silver manages to settle above this level, it will gain additional downside momentum and head towards the next resistance level at $18.50.
On the support side, the pre-crisis level at $16.50 will likely serve as the first material support for silver, although additional support may be formed above it in case silver stays below $17.50 but does not gain significant downside momentum.
At this point, silver has received some minor support above $17.10 but it’s too early to tell whether it will serve as a notable level.
In case silver manages to get below $16.50, it will gain additional downside momentum and head towards the next support area between April highs at $15.80 and the 20 EMA at $16.00.