Silver prices are renewing weekly lows today. The reason for the decline is the high level of inflation in the U.K. in March. The consumer price index increased by 10.1% compared to the previous year. This dynamics is based on the strongest rise in food prices for more than four decades, the Office for National Statistics reported on Wednesday. Economists had expected the growth rate to slow to 9.8%.
These data point to the inflation strength, which means that a key rate decrease by the Bank of England should not be expected in the next meetings. Such strong price dynamics can also spread to other countries. Then expectations for monetary policy easing will shift globally.
Hedge funds are fixing profits in precious metals. It also puts short-term pressure on silver.
Gold and silver prices have good technical support from an uptrend. However, both precious metals are experiencing a slowdown in bullish impulse as positions of hedge funds in the market become more bearish. The Commodity Futures Trading Commission (CFTC) report for the week ending April 11 is under focus. It says that financial managers increased their long positions in silver futures by 4.2 thousand contracts to 42.7 thousand. Meanwhile, short positions grew by 4.8 thousand contracts to 25.0 thousand contracts.
According to the technical analysis, the price of silver has fallen to the lows over the last 7 trading days. The price almost reached local highs at the beginning of this year. On the background of the potential for a stronger drop in gold prices, it is considered that this support will be quickly broken and the silver price will continue to decline. Therefore, the bounce can be from the lower boundary of the rectangle, which is shown on the chart. The level of $23,3 will be the downside target.
Stop-loss can be set at the growth above the maximum, which was positioned today. In that case, the bullish trend will become relevant again. The stop will be at $25.3.
Decrease in the price of silver:
Take profit – 23.3
Stop-loss – 25.3
This content is for informational purposes only and is not intended to be investing advice.