Silver Prices Surge as Yields Pull Back

Silver prices surged higher on Wednesday after a strong first part of the week. US stocks remain flat as U.S. Treasury yields soar. Investors are pricing in the Fed rate hikes of over a 25-basis point increase in  March. The 10-year yield surged to 1.9% and hovers around 2-year pre-pandemic highs. The 2-year yield curve also held near 2-year highs but slightly retreated. Although gold edged higher to 1,840, surging yields will cause downward pressure on gold and cause it to stay in the range of 1,800.

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Technical Analysis

On Wednesday, silver prices continued to push higher. Resistance is seen near the 200-day  moving average at 24.65. Support is seen near the 100-day moving average at 23.28. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are now overbought. The fast stochastic is printing a reading of 97, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Housing Starts Data Rises

Private housing starts in December were at 1.702 million up 1.4% from November. The data exceeded expectations and indicates optimism in the residential housing market. Even though December is usually a slower month, elevated demand for housing has led to continued increasing market activity. The higher-than-expected reading is positive for the USD. A stronger dollar is negatively correlated to silver prices.