Silver Slides 5.3% to $63.72 as Technical Break Signals Further Decline
Silver prices dropped 5.3% on Thursday, erasing previous gains and breaking a key support line. The move threatens a further slide toward $55 if the daily close confirms the bearish pattern.
Silver (XAG/USD) fell 5.3% on Thursday, closing at $63.72. The decline erased Wednesday's gains and broke the support trendline at $64.00. This drop pushed prices below $63.50, triggering a bearish technical setup.
The price action formed a head-and-shoulders pattern on the daily chart. The neckline, which now acts as resistance, was cleared during the session. Traders await a daily close below this level to confirm the downside target.
Hot Inflation Data Drives Dollar Strength
A hot US Producer Price Index report fueled the sell-off. The data pushed US bond yields higher, strengthening the US Dollar. A stronger currency makes dollar-priced silver more expensive for foreign buyers.
The data also increased expectations for a Federal Reserve rate hike next week. Higher interest rates typically pressure precious metals, as they offer no yield. Friday's CPI report will determine if the hawkish stance remains intact.
Technical Targets Point Toward $55
If the daily close confirms the break below the neckline, the next support is $60.00. Falling below that level exposes the head-and-shoulders target near $55.00. This represents a potential decline of nearly 13% from current levels.
On the upside, initial resistance sits at $70.00. A strong rally could push prices to the 200-day moving average at $73.00. Sustained momentum might then open the path to $75.00, but current momentum favors sellers.
Market Drivers and Structural Factors
Silver prices are heavily influenced by the US Dollar and interest rates. As a yieldless asset, silver tends to rise when rates fall. Strong industrial demand in electronics and solar energy also supports long-term price floors.
The market closely watches the Gold-Silver ratio to gauge relative valuation. High ratios often suggest silver is undervalued compared to gold. Recent volatility in the US and Chinese economies continues to impact investment demand for the metal.
According to FXStreet, the current technical structure is critical for short-term direction. The combination of macroeconomic data and chart patterns creates a high-risk environment. Traders must monitor the daily close to validate the bearish thesis.
