The price of silver has broken a series of key support levels, reaching the new 6-month low at $21.7, while the scenario remains bearish.
In recent months, every time silver has reached the support zone of $22.5, it has managed to rebound. This probably kept happening thanks to the activity of long-term buyers, who were trying to buy on dips, with the clear target of increasing their portfolio exposure to silver.
This time, however, the bearish pressure has been stronger, and the spot price has broken both the key levels of $22.5 and $22.2, falling below the $22 mark.
From a technical point of view, the sharp breakdown of $22.2-22.5 per ounce, has opened space for a further decline. The price falling to a low of $21.7, shows that the grey metal is suffering strongly from the pressure coming from the combination of rising rates, high yields, and the strength of the U.S. Dollar.
Moreover, high rates are likely to increase the chances of seeing a recession or at least an economic slowdown. Considering that over 40% of the global demand for silver is coming from the industrial sector, this could pose a challenge for silver.
Electric cars and photovoltaic are the two industries which are generating the most significant part of this demand and analysts are relatively confident that the positive trend of the last few years will not change easily. In the short-term scenario, the prospect of ‘high rates for longer’ could spook the markets.
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