Silver Price News: Silver Struggles on Macro Woes

Performance & Positioning

Silver starts the week trading around $27.7/toz, having stabilized in the latter half of last week, but still down over 3% on last Monday’s open. The most recent CFTC Commitments of Traders (CoT) report, published late on 9 august suggests that net speculative silver futures positions were flat on the previous week. Although this represents almost a 20% reduction on the 54-month high registered on 26 July, we note that such position-taking has remained at elevated levels since late March 2024 in contrast to considerable historic volatility. Moreover, physically backed silver ETFs/ETCs appear to have returned to net inflows in recent days, having suffered some outflows earlier in the month.

Fundamental Drivers

While silver is less impacted than gold by the firming of US rates seen over recent days, it is significantly more sensitive to ongoing concerns of global economic weakness. While this is still considered a ‘tail risk’ for markets, it is unsurprising that asset classes that have performed well and geared to economic growth have struggled recently in the face of soft economic data. This is as true of equities in respect of earnings prospects, and it is of silver in respect of industrial demand.

Upcoming events pertinent for silver investors include China loan data for July and the OPEC Monthly Report, both on 12 August. Atlanta Fed President Raphael Bostic is also scheduled to give a speech that day. As both a voter and notable hawk on the current FOMC, his comments on the US economy might well be an indicator of current Fed thinking. 13 August brings us the EU Flash ZEW Economic Sentiment for August, with the German subcomponent being of particular interest.

Technical Analysis

Silver’s technical position suggests that it is struggling to recover having pierced major horizontal support (now resistance) at $28.60/toz on 25 July and again failing at this resistance level on 5 August.

Current trading sees silver testing ascending oblique resistance at $27.67. Although this resistance is minor, we note that momentum as indicated by both RSI and MACD also appears weak and mitigated only slightly by softer volumes. However, should this resistance level be negotiated, silver will then face stronger descending oblique resistance, currently at $27.95/toz with the two oblique resistance lines converging on 20 August around $27.80/toz. More generally, the silver chart appears increasingly congested over the next 1-2 weeks.

In the meantime, major horizontal support remains intact at $26.20 and major horizontal resistance at $28.60, the latter now coincident with the sharply declining 20-day Simple Moving Average. Further minor oblique resistance is noted currently at $29.28/toz and major horizontal resistance at both $29.77/toz and $32.06/toz.