Silver Prices Experience Decline Amidst Profit-Taking
- The price of silver continues to drop, but bullish momentum remains intact.
- The US President confirmed advancements in trade talks with China, boosting silver to multi-year highs.
- The Xag/USD is still trading above $36.00, with a relative strength index (RSI) of 67.
On Wednesday, silver prices pulled back as traders took profits, leading to a decrease from recent highs that had been reached. The price is now hovering around the psychological support level of $36.00, having touched its highest point earlier this week since February 2012.
Trade negotiations between the US and China wrapped up on Tuesday in London, resulting in a temporary framework agreement that reignited hopes for improved bilateral trade relations.
President Trump commented on the trade progress on Wednesday, stating, “We’ve made real progress with China. It’s about fairness, and we’re close to what we can work in both countries. I’m not going to show weakness.”
China’s Deputy Prime Minister also remarked, “China’s position on trade issues with the US is clear and consistent. Both parties should work towards establishing stable, long-term trade ties.”
Initially, this optimism bolstered sentiment regarding industrial demand and helped to support silver prices. However, the further upward movement has been limited due to already high pricing.
Silver Prices Expected to Decline from Overbought Position
Silver managed to break through a significant resistance level at its October 2012 high of $35.96, yet couldn’t sustain momentum past $36.65, falling just short of its next major resistance point at $37.49.
Currently, the 10-day Simple Moving Average (SMA) stands at $35.12, with a support zone between $35.00 and $34.87, indicating previous breakout levels and Fibonacci supports.
Silver Daily Chart
If prices continue to fall, there could be a potential drop to $34.00, with a 50-day SMA potentially being at $33.01. For sustained upward movement, prices would need to break over $37.49.
The 67 RSI is nearing overbought territory, which suggests a possible reinforcement of bullish momentum, but also hints at the potential for short-term pullbacks.
