Today, Silver prices (XAGUSD) experienced a sharp decline as the London trading session commenced. The sharp drop is now threatening to turn the multi-day trend downwards as the price is trading just above the critical September 13 low of $17.38.
The trend has been upwards since May 2019, and the price has been creating higher and higher lows since then and the September 13 low being the latest swing-low and trend-defining level.
If the price manages to close below the swing low, bullish silver traders might head for the exit as and send prices towards the next support level, the August 19 low of $16.83.
However, if silver prices manage to stay above the September 13 low, XAGUSD might be able to recuperate, and traders might set their eyes on the September 23 high of $18.74.
Silver prices, six-hour chart
The weakening in gold and silver prices comes amid a strong surge in the US Dollar, that has lifted the dollar index to a whisker away from its 2019 high of 99.37. Several factors have boosted the dollar, but the main driver is the Federal Reserves reluctance to reduce interest rates and suggesting via their “dot-plot” that US interest rates will remain unchanged until the end of 2020. On the other end, other central banks such as the Bank of England, RBA, RBNZ, and ECB are all advocating for lower interest rates, and today, dovish comments from BoE’s Saunders sent the GBPUSD lower, further strengthening the Dollar.
In the afternoon, trader’s attention will shift to the latest US Durable goods orders report, PCE inflation figures, and the Michigan Consumer sentiment index.