The precious metal has plunged by over 12% on the day and well off the highs from the bounce in the past two days of around $92. The drop now sees silver drop back to around $76 and the technicals highlight the move rather well.
After the sharp pullback from last week, it was always going to prove to be tough to regain momentum again. That especially now that the profit-taking mindset has set in and investors will be increasingly cautious. And the near-term chart shows exactly that, with silver failing to break some key technical levels on the dip buying this week:
The bounce stalled around the 38.2 Fib retracement level around $90.55, which also clearly indicated how much softer the bounce was compared to what we saw with gold here. Evidently, gold is also now taking a knock after failure to secure a firm break above $5,000 yesterday with price also dropping back below the key hourly moving averages now.
Coming back to silver, the bounce also failed to contest a push of the 100-hour moving average (red line) today. And that saw technical sellers come back in to reject the move and send price lower on the day.
Despite the lack of major headlines in markets, just be wary that the latest volatility snapshot for precious metals does not need any news to kick around. The sharp pullback since last week has already sent volatility shockwaves and they will take time to work its way out through the system.
As such, one can reasonably expect a larger consolidative phase for both gold and silver at this point. The correction will end when it ends and in the meantime, dip buyers will have to be wary not to overextend. That especially since profit-taking is still part and parcel of the game currently.
