Silver Price News: Silver Dips as Dollar Rises, Eyes on ‘Double-Top’ Formation

Silver prices fell further on Tuesday, in a continuation of the previous week’s bearish trend.

Prices fell as low as $29.41 an ounce on Tuesday, down from around $30.75 an ounce in late deals on Monday, representing a day-on-day loss of just over 3%.

Gold prices were also lower on Tuesday, creating a bearish backdrop for silver.

The US dollar strengthened against other major currencies on Tuesday, making dollar-denominated gold and silver more expensive for buyers in other currencies, denting demand.

Efforts to broker a ceasefire in the war between Israel and Palestinian militant group Hamas this week also appeared a step closer to succeeding, which potentially erodes some of the recent risk premium in precious metals prices.

On the technical charts, the clear drop below $30.00 an ounce for silver prices confirms the ‘double-top’ formation that can be seen since May 17. This is usually taken as a bearish signal in the market as a double-top illustrates that prices have failed twice on the upside, suggesting a greater chance of momentum shifting to the downside in the short-term.

That said, the longer-term picture for silver prices remains constructive, with 2024 expected to be the fourth straight year of structural supply deficit for the grey metal.

At the same time, industrial demand continues to look promising due to silver’s important role in the energy transition, for example in solar panels and batteries, as well as in a wide range of applications in aerospace technology, electronic circuits, nuclear power, medicine and water purification.

Looking ahead, Wednesday will see the US ISM Services PMI figures for May, providing a fresh snapshot on economic conditions in the US, followed by Thursday’s interest rate decision by the European Central Bank, with expectations of a cut to 4.25% on the cards.

Any start to an interest rate-cutting cycle is seen as supportive for precious metals as lower rates reduce the opportunity cost of holding non-interest-bearing investments.