Silver price has become boring after a bumper start of the year that saw it crack the $30 resistance level. Today, silver is trading at $25.15, which is slightly above last week’s low of $23.78. Similarly, gold is trading at $1,740, which is slightly above the lowest level last week.
What happened: The silver price has been struggling lately. It has dropped by more than 16% from its highest level this year. This price action has happened at a time when it ought to be doing well.
Furthermore, demand is expected to rise because of the recent stimulus deal in the US. Further, recent numbers have shown that the manufacturing sector is doing well. Therefore, a strong manufacturing sector is usually a positive thing for silver because of its industrial qualities.
Meanwhile, Joe Biden has proposed a $2.3 trillion infrastructure package that could also lead to more demand for the metal.
Therefore, the recent weak silver price is partly because of the ongoing rotation from precious metals to cryptocurrencies. Many analysts and investors seem to believe that this rotation will continue rising in the near term. Also, the rising US bond yields are sending a signal that the Fed will hike rates soon. Silver tends to underperform in a period of high rates.
The silver price is trading at $25.15. On the four-hour chart, this price is along the 25-day and 15-day exponential moving averages. It is also between the important support and resistance levels at $21.85 and $29.38, respectively. The Relative Strength Index (RSI), on the other hand, is hinting at a bearish divergence pattern.
Therefore, silver price may be about to drop below the important support at $23.78. If this happens, the next key support to watch will be $21.85. On the flip side, a move above $27 will be a vindication for bulls and will open the possibility that the price will soar to $30.
