Silver Price Gives Back Near 61.8% Of Last Week’s Gains
- Silver prices have nearly given back 61.8% of their gains from the rally which started at the March 16 low of $15.22.
- In light of the upward trend, today’s decline may be seen as short-term in nature.
Silver prices have nearly given back 61.8% of last week’s gains and the main motivator for the rally on March 16 was the set of dovish comments that emerged from the Federal Reserve. The central bank lowered the amount of rate hikes that they are now expecting to implement in 2016. Specifically, they referenced that rate hike implementations would be lowered from four down to two.
The lowering of rate hike volume than that which was previously anticipated, trigged a softer USD and a stronger silver price. This bullish driver for silver prices is still in place.
The technical trend is bullish, and has been since January 2016. The rationale behind this, is that price is still trading above the March 16 low. The current decline may therefore be viewed as a correction within the upward trend and could be short-term in nature.
We note that price has given back close to 61.8% of its gains and some technical traders may use the 61.8% and 50% Fibonacci retracement levels as an indication as to the levels at which price could bounce.
For the trend to turn bearish, the March 16 low of $15.22 would need to give way and if this happens, price may reach the next support level which is the March 3 low of 14.87.
U.S. Data on Tap
U.S. New home sales are seen rising by 3.2% MoM according to a Bloomberg news poll, while U.S. Crude Oil Inventories are expected to gain 2.53 million barrels.
Silver Price | FXCM: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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