Breaking below the $70 level in the silver market could be a major problem for the bulls.
Silver
The silver market has gotten hammered again during the trading session on Friday and I think there is a whole multitude of reasons to think that would be the case. Specifically, with the interest rates rising in the United States, that puts a lot of pressure on precious metals because think of it this way, if you were a large fund, would you rather store silver or take a somewhat risk-free trade in holding bonds for the payments that you receive over the longer term?
Industrial Demand and Risk Appetite
When I look at this chart, I also recognize that we are threatening a major support level in the form of $70 and breaking below the $70 level could open up a pretty deep correction. Silver has formed a massive H pattern and follow-through could get ugly. We could be looking at a move down to the 200-day EMA, possibly even as low as $50 pretty quickly, I would imagine.
To the upside, if we do rally, we will have to recapture the $75 level to build any type of confidence and even then, you are probably looking at sideways action more than anything else. The 50-day EMA sits just above $80, and I think that will be a major factor as well. Ultimately, you also have to keep in mind that traders continue to look at silver through the prism of a risk appetite situation with silver not necessarily being a risk appetite metal. The overall attitude of this market was based on industrial demand when we shot straight up in the air. Now there are serious questions about AI data centers and whether or not the math works out. With all of that and the fact that the US dollar is gaining with higher rates, it is difficult to get overly excited about silver and if we break down this could get rather ugly.