Silver prices dropped 2.44% in the past week, closing the week out to erase 60% of the gains in the week of September 19. A recovery was attempted following Wednesday’s low, with momentum accelerating on Friday, but gains were not sustained as headlines related to Deutsche Bank dominated risk trends across the financial markets.
In the upcoming week, further developments related to Deutsche Bank, and Friday’s NFP figures stand to trigger volatility.
News that Deutsche Bank negotiated a smaller fine sent silver prices sharply lower on Friday, capping the rally attempt. Ahead of the news, gains had exceeded 3% in the precious metal, while the reversal nearly completely erased gains as the daily close indicates a gain of 0.15%. The price action has served to print a bullish reversal candle on the daily chart, as an inverted hammer is seen.
Silver prices should remain supported based on the daily reversal candle, with additional support in the form of a trendline. A rising trendline connecting August 28 lows with August 19 lows offered support in the past week and is seen near Friday’s close.
NFP data is scheduled for release on Friday and carries potential to trigger a technical break in Silver prices. The figure is expected at 171,000 against a prior reading of 151,000. The data release has historically triggered volatility in the markets, while this week’s release carries additional sensitivity following the latest monetary policy statement from the Federal Reserve.
The FOMC is seen moving closer to a rate in the near-term, with the statement indicating that the case for a rate hike has strengthened. The central bank included a clause stating that further data would need to be assessed, with Janet Yellen clarifying in the press conference that unless there is a significant shortfall in data, most Fed members felt comfortable with a rate hike this year. The rhetoric changes market expectations this week, as a figure close to expectations stands to have bearish implications for precious metals.
Several of the major currency pairs are seen falling into a range into the jobs report with breakout potential, and technical levels of importance are seen among precious metals as well. The 4-hour XAG/USD chart shows a rising trendline and declining trendline containing prices, creating an apex. The declining trendline connects the early July spike high with early August highs and indicates clear resistance in the upcoming week. Horizontal resistance is in play slightly above the trendline, as the psychological $20.00 price point has come into play twice in December to cap rallies. The rising trendline offers the first level of support, while a break points to the next level of importance at $18.19. The horizontal level reflects lows from 2013 and the highest weekly close in 2015.