Investors took silver to its lowest level since the January 23 on Wednesday last week. Silver fell in line with gold, as mutual disappointment amongst traders about the limited prospects for US QE3, undermined the market. The increased risk of prolonged recession in Europe also dampened sentiment further.
The good news is that silver has only fallen 50% from this year’s highs and it has not plummeted as sharply as gold. However, reduced offtake by industrial units and coin makers kept pressure on silver prices.
Technically, the market remains above the 200 day moving average. There is a base pattern beneath the market in the $26 area.
In addition, while a appreciating dollar may not always boost a commodity priced in dollars, silver performed very well in January, while the dollar rallied against the euro.
To keep the medium term outlook positive the major supports to watch next week are 31.47 then 29.93. Failure to hold above here would indicate that sentiment is deteriorating further, allowing room for a decline towards 27.50 / 28.00. Resistances are at 33.29, then 35.00 and 37.48.
