Silver Price and SLV ETF death cross nears as recession risks rise

Silver price remained under intense pressure as the US dollar index (DXY) rally continued and risks to the global economy continued. Silver plunged to a low of $22.10 on Friday, the lowest level since March 21st. It has dropped by more than 15% from its highest level this year. Similarly, the iShares Silver Trust (SLV) ETF has dropped to $20.

China slowdown continues

Silver price has been in a strong bearish trend in the past few months amid rising concerns about the industry. The biggest concern is the slowdown of the Chinese economy. Data published on Sunday showed that the weakness continued in September. 

China’s services PMI dropped to 50.2 in September, worse than the median estimate of 52.0. Similarly, the manufacturing PMI dropped to 50.6, pointing to continued weakness during the month. 

China is an important market for silver since it is the biggest manufacturer in the world. It is the market leader in key industries like semiconductors, solar panels, and home equipment, which consume substantial amount of silver. 

Other leading economies are also slowing as well. Some European countries like Germany have already moved into a recession. There are also signs that the American economy is slowing as inflation ticks up.

Silver price is also falling as the US dollar index (DXY) surge continues following the extremely hawkish Federal Reserve. The Fed decided to leave interest rates unchanged between 5.25% and 5.50%. It also pointed to another 0.25% increase later this year, raising recession risks.

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Silver tends to have an inverse relationship with the US dollar because of its role as a precious metal. Like gold, silver is usually affected substantially by the actions of the Federal Reserve. 

Looking ahead, the key catalysts for silver will be the upcoming US non-farm payrolls (NFP) data and the statement by Jerome Powell.

Silver price forecast

The daily chart shows that the silver price has been in a strong bearish trend in the past few days. It has now slipped below the key support at $22.26, the lowest level on June 23rd and August 15th. Silver is also about to form a death cross pattern, which happens when the 200-day and 50-day moving averages.

Therefore, there is a likelihood that the price of silver will continue falling as sellers target the key support level at $20. If this happens, it means that silver could crash by about 10% from the current level.

The post Silver Price and SLV ETF death cross nears as recession risks rise appeared first on Invezz.

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