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Silver is Consolidating Near Local Highs

11/10/2022 11:58 AM

Silver prices show a slight increase, again trying to consolidate above 21.00. The market is waiting for the publication of key macroeconomic statistics from the US on the dynamics of consumer inflation for October, as it can significantly affect the future monetary policy of the US Federal Reserve. Current forecasts suggest a slowdown in the annual rate from 8.2% to 8.0%, which remains 4 times higher than the target levels set by the regulator. At the same time, analysts expect that in monthly terms, the Consumer Price Index will continue to grow, and therefore the US Federal Reserve may raise interest rates in December by another 75 basis points. The instrument was also supported yesterday by a decrease in the yield of US government bonds: it fell to 4.159% for ten-year bonds after closing at 4.214% on Tuesday's trading session.

Significant pressure on silver quotes the day before was exerted by data from China, which once again confirmed the slowdown in the economy. The Consumer Price Index in October showed an increase of only 0.1% after 0.3% in the previous month, and in annual terms, inflation fell from 2.8% to 2.1%, which also turned out to be significantly lower than market expectations at 2.4%.

According to the report of the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in silver amounted to 1.5 thousand against –0.1 thousand a week earlier. The "bears" still hold the lead in terms of positions among the producers: their balance is 31.831 thousand against 5.975 thousand for the "bulls". This week, sellers increased the number of contracts by 1.792 thousand, while buyers liquidated 0.749 thousand.

Bollinger Bands in D1 chart show quite active growth. The price range is expanding from above but it fails to conform to the surge of "bullish" activity at the moment. MACD indicator is growing preserving a stable buy signal (located above the signal line). Stochastic, reaching its highs, gradually reverses downwards, reflecting the risks of overbought instrument in the ultra-short term.

Resistance levels: 21.20, 21.59, 22.00, 22.40. | Support levels: 20.86, 20.48, 20.00, 19.74.

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