Silver experienced its worst month since 2020 in February after rising from September to December.
Charts indicate that if the $20 support level is broken, it will stop at $18.80.
Any short-term recovery for silver may be complicated by the dollar’s return.
A few months ago, it was competing head-to-head with gold to see which was the more brilliant wager. At one point, silver drove gold higher before driving it lower. As gold reached the lower $1,800 range, the decline halted. Yet the price of silver has been falling, and this month has already been the worst in the past three.
And as the strong dollar pound on all commodities, things could get worse for the so-called white gold, which could break important $20 support next.
And as the surging dollar pounds on all commodities, especially metals, things could get considerably worse for the so-called white metal, which may break crucial $20 support next.
As trading for February neared its close, the spot silver hovered at $20.24 an ounce in Asia Tuesday. Silver futures, on New York’s COMEX, were a smidgeon higher at $20.75. Both were down 14% from the start of 2023, with almost 13% of that loss coming this month alone. That makes February the worst month for silver since March 2020, when it fell 16% amid the global outbreak of the coronavirus pandemic.
With the Dollar Index Futures hitting eight-week highs of 105.315 on Monday on a continued rise in U.S. rate hike expectations, more ill portends for silver, say the chartists. They forecast a drop to the $18 region for the white metal even as its more illustrious ‘cousin’ gold — known as the yellow metal — appears to have a fair chance of beating back bears who want to take it below $1,800.
Fundamentally, silver appears to be at an inflection point over how much it could advance from China’s dropping of its guard over the coronavirus pandemic.
In a late 2022 analysis on silver, Capital.com noted the potential for a surge in economic activity as Beijing transitions from its COVID-zero policy, resulting in “increased silver demand from solar panels, of which China still retains the overwhelming majority.”
Silver is a key element in solar panels due to its usage in photovoltaic power, which drives some of the leading sources of renewable energy globally. With about 20 grams of silver being used in every solar panel, this continues to be a vital source of demand for the metal.
Capital.com noted that China’s share of global solar panel production has risen from about 55% to around 84% in the last 12 years.
Silver is also used in batteries, photography, dentistry, semiconductors, and other industrial applications.
Schiff Gold, in an outlook issued Friday, said silver had to get back above $22 to prevent a further onslaught of its price.
“If it cannot reclaim $22 in short order that would be a bad sign and could see a quick retest of the $20 level.
As the chart shows, the last three years have had a few false moves where silver’s golden cross was quickly invalidated. This leaves room for more caution [for silver bulls] than [those in] gold. For now, too early to tell on this one… next month should have a clearer signal.”
