Silver price (XAGUSD) is under pressure today, a day after it moved above a key resistance level. The precious metal is trading at $28.20, which is 1.55% lower than yesterday’s high of $28.87. Other metals, too, are in the red today. Gold price is down by 0.35% while platinum and palladium price have fallen by 0.65% and 0.25%, respectively. However, base metals, like copper and aluminium are in the green because of the strong manufacturing PMI data.
Why silver price is falling today
From a broader perspective, most things are positive about silver price today. As an industrial metal, there is a sense in which yesterday’s economic data were good for the metal. That is because it means that companies are doing more work and experiencing more demand. Also, silver price is likely to benefit from the European Union recovery fund that was passed in August.
However, there are three main reasons why the price is falling today. First, the US dollar is relatively stronger today. As we have written before, a stronger dollar tends to be negative for silver and gold prices because silver is usually priced in dollars. The dollar index is up by 0.25% today. This is because the US dollar is up by the Swiss franc, Japanese yen, euro, and British pound.
Second, the price of silver is down today because of uncertainties about stimulus in the US. According to Bloomberg, Nancy Pelosi and Steve Mnuchin held talks yesterday in favour of a new stimulus bill. Such a bill would be a good thing for silver because it would devalue the dollar and increase demand for silver. Finally, silver price has fallen because of the US election with polls showing Donald Trump and Joe Biden being in a tight race.
Silver price technical outlook
The daily chart shows that silver price moved above the descending line of the triangle pattern. The price is above the 50-day and 100-day EMAs. Also, the price is still above the triangle pattern. It is also slightly above the 23.6% Fibonacci retracement level.
Therefore, while the price is still down today, I suspect that it will resume the upward trend in due time. If it happens, the target will be this year’s high of $29.84. On the other hand, a move below $26 will invalidate this trend. This price is at the intersection of the lower side of the triangle pattern and the lowest level on August 25.
XAGUSD technical chart