Silver price has turned ugly. It is trading at $25.50, where it has been in the past few days. From September last year, the metal has traded between the resistance at $28 and the support of $21.72. Today, it is up by more than 1.38%.
What’s happening: Silver price has moved sideways in the past few days partly because of the overall strong US dollar. The dollar index has been rising recently and is now trading at $90.50, which is higher than the year-to-date low of $89.25. Silver and the US dollar usually have an inverse relationship with one another.
Silver has also lagged due to the performance of cryptocurrencies. In the past few months, cryptocurrencies have been breaking records, with Bitcoin reaching an all-time high of $41,000 less than two weeks ago. Ethereum price is also targeting the all-time high while other currencies like Litecoin and Bitcoin Cash have also continued to rally. Therefore, there is a possibility that investors have pulled money from silver to these currencies.
Still, there is a catalyst for silver price in the near term. Joe Biden will be inaugurated as the president of the United States tomorrow. He has already pledged a $1.9 trillion stimulus package. In addition to that, he has pledged to spend trillions of dollars on infrastructure. All this will likely lead to more demand for silver and push its price higher.
Silver price technical outlook
Looking at the daily chart, we see that the silver price formed a double-bottom at $21.72 between September and November last year. It then soared and reached a high of $28. As a result, the Average True Range (ATR) and the momentum indicator have continued to decline.
Therefore, in the immediate near term, I suspect that the price will continue falling as bears aim for the double-bottom level at $21.72. However, in the long-term, I believe that the price will continue to bounce back.
Silver Price Prediction Chart