Silver prices steadied after posting their biggest one-day drop in more than five years, as traders took profits following a strong rally in the final months of the year.
On Tuesday, the price of silver approached $73 per ounce after falling by 9% in the previous trading day; the price of gold was largely unchanged after experiencing its biggest drop in two months. The decline in precious metal prices was due to technical indicators suggesting an overly rapid rise, and the lack of market liquidity exacerbated the recent price fluctuations.
To control risks, some exchanges have taken measures to increase the margin requirements for some Comex silver futures contracts starting from Monday. After the exchanges raised the margin requirements, traders need to invest more funds to maintain their positions. Some speculators do not have enough funds and thus are forced to reduce or close their positions.
Despite a pullback, gold and silver are still on track for their best annual performance since 1979. Central banks’ heavy buying of gold, inflows into exchange-traded funds (ETFs), and the Federal Reserve’s three consecutive interest rate cuts have all provided support for precious metal prices. Lower borrowing costs are undoubtedly a boon for non-interest-bearing commodities.
The latest rise in the price of silver occurred just two months after a full-scale sell-off in the London market. At that time, the inflow of funds into ETFs and exports to India had consumed the already extremely low inventories. Since then, there has been a significant inflow of inventories in London, but as traders are still waiting for the outcome of a US investigation that could lead to tariffs or other trade restrictions, most of the world’s silver remains stuck in New York.
Motilal Oswal Financial Services Ltd., an Indian brokerage firm, said in a report that this year’s silver rally “is being driven by a genuine metal shortage”. Analysts Navneet Damani and Manav Modi wrote: “Physical shortages, policy-driven supply constraints and concentrated inventories are increasingly influencing prices, which signals a lasting shift in the way the silver market is priced and traded.”
Technical analysis:
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Gold: The low-sweep liquidity we provided at 4450/60 yesterday to catch a rebound did not show significant results. The light trading volume during the holiday period magnified the downward space. However, after the price stabilizes within the day, catching a rebound remains the top priority. If there is a bullish engulfing signal at the 4350/60 area, it is recommended to attempt 1-2 times. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq: After sweeping through 25,500 overnight, although it did not show a rapid rebound, the current downtrend has temporarily stabilized. The end shows a converging trend. Within the day, it is recommended to pay attention to the signal of an upward breakthrough and consider participating. The target is set at 25,600, the liquidity area of the overnight rebound. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the price fluctuated and rose, but it fell back and consolidated in the latter half of the night. Pay attention to the position of the previous demand zone platform within the day. If there is a pullback, you can try to buy low 1-2 times. At the same time, also pay attention to the liquidity sweep in this area. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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