The precious metals sector has seen relatively weak action in the past few trading sessions. Gold has barely moved while silver price has continued to hover around $14.2 per ounce.
Why has silver price remained stagnant? The main reason is that is some indecision in the market about the direction the metal will move to. This indecision is partly because we still don’t know the exact impact of Coronavirus on the economy. Some economists, including Fed’s James Bullard, have argued that the economy will have a V-shaped recovery.
Other economists have predicted an L-shaped recovery, where the economy drops and then stays there. Worse, some economists predict an I-shaped recovery where the economy continues to drop with no end in sight.
Silver, gold’s small brother, tends to move according to the economy. Most people who buy it do so as a way of getting exposure to gold. Gold, on the other hand, tends to move depending on the dollar. Therefore, we could see some action in the silver market after we receive the important job numbers from the US.
When you look at the hourly chart, you see nothing happening in the silver market. This changes when you extend the timeline to four hours. On this chart, two things are evident. First, silver price has been attempting to rebound after hitting a low of 11.6 in mid-March.
Second, we see that the price has found some significant resistance between 13.7 and 14.65. This is a range close to the 38.2% Fibonacci Retracement level. Another thing is that XAGUSD is now attempting to move to the bearish fifth wave of the Elliot Wave.
While it is hard to make a prediction at this point, the likely scenario is that silver price will decline and possibly test the previous low of 11.6.