Silver price is on a rebound as a risk-off mood remains a key driver in financial markets. Interestingly, the decline in risk appetite has had a dual impact on prices. On the one hand, silver’s industrial demand has dropped as the coronavirus Delta strain spreads aggressively.
According to health authorities in the US, the variant now accounts for 83% of the new coronavirus cases. The figure is a jump from 50% at the beginning of July. The subsequent fears explain the decline in silver price from an intraday high of 25.76 on Monday to below the crucial level of 25.00 at a low of 24.75 on Tuesday.
However, its status as a safe-haven and hedge against inflation has boosted its prices. On Wednesday, the fear and greed index was at 23, which highlights extreme fear in the market. In the previous week, the index, which measures the emotion driving the market, was higher at 34.
With the lack of first-tier macro news in the current week, the risk sentiment will be a key driver of silver price. Currently, the US dollar is trading higher at around its highest level since early April. Notably, the value of the greenback has an inverse correlation with the price of precious metals. As such, further gains by the dollar are likely to curb those of silver.
Silver price technical outlook
Silver price is on a rebound after falling past the crucial level of 25.00 in the previous session. At the time of writing, it was up by 1.38% at 25.28. On a two-hour chart, it remains below the 50 and 200-day EMAs. In the near term, I expect it to find some resistance along the 50-day EMA at 25.37.
If the bulls gather enough momentum to push it past the prior resistance level of 25.50, the next target will be along the 200-day EMA at 25.92. On the flip side, a move below the psychological level of 25.00 will have the bears eyeing the prior support level of 24.50.
Silver price chart
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