XAG/USD sees new YTD low as selloff continues
The recent gains in precious metals, most notably gold but also silver, were backed by beliefs that a slowing economy would give way to the end of rate hikes by the Fed, and even possibly a few cuts before year-end. The economic data from December backed this view, which led investors to believe that the US economy was struggling, as CPI, PPI, retail sales, and industrial production all fell well below expectations.
The change in expectations about the future of the economy given the sudden and unexpected pickup in economic data has left markets confused for the past few weeks, and those assets that were performing best during the time when investors believed a recession was on the cards - like gold and silver - are now suffering the most.
There is no denying the downward bias in XAG/USD as the pair dips to a three-and-a-half-month low, but the oversold RSI could trigger some consolidation before the downward trend continues. The precious metal seems to have found some small support around $20.40, bouncing back towards Monday’s close at $20.61. That said, the daily candlesticks are still forming lower lows and highs, which suggests that any level of support is most likely to be short-lived unless the fundamental view reverses.
I think it’s only a matter of time before we move lower to the $20 mark, which is an important level in and of itself. This will be a good test of buying demand as there are likely to be some stops placed in and around this psychological round number, which could trigger a small bounce higher. In any case, we may see some consolidation around current levels before getting there, with the potential for an attempted rebound which could fade around $20.80.
The change in expectations about the future of the economy given the sudden and unexpected pickup in economic data has left markets confused for the past few weeks, and those assets that were performing best during the time when investors believed a recession was on the cards - like gold and silver - are now suffering the most.
There is no denying the downward bias in XAG/USD as the pair dips to a three-and-a-half-month low, but the oversold RSI could trigger some consolidation before the downward trend continues. The precious metal seems to have found some small support around $20.40, bouncing back towards Monday’s close at $20.61. That said, the daily candlesticks are still forming lower lows and highs, which suggests that any level of support is most likely to be short-lived unless the fundamental view reverses.
I think it’s only a matter of time before we move lower to the $20 mark, which is an important level in and of itself. This will be a good test of buying demand as there are likely to be some stops placed in and around this psychological round number, which could trigger a small bounce higher. In any case, we may see some consolidation around current levels before getting there, with the potential for an attempted rebound which could fade around $20.80.
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