- Silver extends reversal below $7600, despite the moderate risk-off mood.
- The growing geopolitical risks have taken a back seat this week, with US data front and center.
- Technical indicators are turning lower, suggesting the possibility of a deeper correction.
Silver (XAG/USD) is trading lower in an otherwise calm market session on Thursday. The moderate risk-off sentiment is failing to provide support to the precious metal, which has extended its reversal from Wednesday’s highs, near $83.00, to levels below $76.00 so far.
Investors
Precious metals are on the defensive on Thursday, giving away some of the ground taken earlier in the week. Investors have taken in stride the US intervention in Venezuela and the frictions between China and Japan, to focus on the US Nonfarm Payrolls report, due on Friday, and the path of the US Federal Reserve’s (Fed) monetary policy.
Technical Analysis: Risks of a deeper correction emerge
XAG/USD trades at $75.98, testing the 50-period Simple Moving Average (SMA), at $75.79, which has acted as dynamic support during the pair’s uptrend from late-November lows. The lower high was printed on Wednesday, and the weakening momentum indicators hint at the posibility of a deeper bearish correction.
The Relative Strength Index (RSI) prints at 46, reflecting a cooling impulse after recent gains. The Moving Average Convergence Divergence (MACD) crosses below its signal line and dips under zero, with a deepening negative histogram reinforcing a corrective tone.
A clear break of the mentioned SMA, at $75.79, is likely to strengthen bears’ confidence to retest the late December lows near $70.50. To the upside, session highs at the $78.00 area are capping bulls for now and closing the path towards Wednesday’s high, near $82.80, and the all-time high, at $85.8,7, hit on late December.
