Silver price (XAGUSD) is under pressure today as investors remain concerned about demand and the overall stronger US dollar. The metal is down by more than 2% and is trading at $24.12. Other metals are also in the red, with gold and silver prices down by 0.45% and 0.10%, respectively.
The price of silver is gaining because of the surging number of coronavirus cases in Europe and North America. In the US, the average number of daily infections has risen to more than 50,000. In Germany, the number of cases has jumped to an all-time high. The same is true in other countries like Spain, Italy, and Belgium.
A rising number of Covid has some pros and cons for silver prices. On a positive side, they may affect the supply as miners are forced to abandon mines. Also, it may force central banks and governments to pump more money to the financial system. If this happens, in theory, it would help silver because of its role as a store of value. On the other hand, rising Covid case would affect demand for silver because of its role as an industrial metal.
Today, silver price is also falling because of the relatively stronger dollar. The dollar index has jumped by more than 0.30% today. Silver and the US dollar usually have an inverse relationship.
Silver prices technical outlook
In my previous report on silver, I predicted that the price would fall back to $20. That did not happen as a weaker greenback helped push the price to above $25.
The four-hour chart shows that silver price attempts to recover found strong resistance at $25.52 on October 12. The chart also shows that the price is at the psychological-important level of $24.00. It is also slightly above the ascending pink trendline. Most importantly, silver price seems to be forming a head and shoulders (H&S) pattern, with the neckline at $22.90.
Therefore, I suspect that, in the immediate short-term, the price of silver will continue falling as bears aim for this neckline. On the flip side, a move above the previous resistance at $25.52 will invalidate this trend.
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