Daily Market Recap – SILVER Stabilizes but remains under pressure

The silver ounce is returning to test a key support zone at $21-22 in the near term. This price area was major resistance in 2016, but it has now acted as support since late last year and the underlying technical outlook depends on this threshold.

Silver ounce seems to be penalized by its industrial aspect. Indeed, it is not its safe-haven aspect that seems to be penalizing the price of silver as the price of gold continues to consolidate.

Industrial metals have been under pressure for several weeks as the peak of global growth was exceeded over the summer and the setbacks in the Chinese real estate sector are expected to weigh on growth and demand for materials.

Furthermore, metal gains were limited by a stronger dollar, a rally in equities, and higher government bond yields.

From a technical perspective, the underlying bullish outlook is hanging on the $21-22 support zone, but it is important to note that this outlook was already weakened a few months ago by the bottom of the ascending triangle and its Bollinger Bands of the weekly time unit.

The market's reaction to the support area will be key. A rebound would maintain a bullish fundamental outlook and pave the way for a return to the recent high at $25 in the near term, while a pullback below would pave the way for a much larger correction in silver.

The next catalyst for the metal prices will likely be Friday's inflation numbers. There are mounting signs that price increases are accelerating to the point that the U.S. Federal Reserve has abandoned the idea that they are transitory. Friday's number could give the Fed further evidence that inflation is strengthening and reinforces the idea that it should move faster on withdrawing its expansionary monetary policy. The debate could then take place at the next FOMC meeting on December 14 and 15.

(Chart Source: Tradingview 09.12.2021)

Jerome Powell's rhetoric and new FOMC dot plots next week will be key to look at. Hawkish rhetoric would pressure the inflation outlook and support the dollar, which should put pressure on precious metals prices, including silver.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.