Take Caution: Choppiness Abound in the Silver Markets

Geopolitical risks saw safe-haven buying for precious metals like silver, but tensions subsiding in the Middle East between the U.S. and Iran, that could feed into some weakness for silver prices. However, with the news-sensitive markets ready to move at any moment’s notice, choppiness in the silver market should caution investors before diving in.

“Silver markets pulled back just a bit during the trading session on Monday to kick off the week, as we continue to hover around the $18.00 level,” an FX Empire price forecast by Christopher Lewis noted. “The large, round, psychologically significant figure of course will attract a lot of attention, as it has shown signs of support. Ultimately, if we pull down below there, I see the 50 day EMA underneath offering quite a bit of support. At this point, the silver market will continue to move to risk aversion or risk appetite, which is a fluid situation.”

From a technical perspective, a key price target to watch is the $17.00 level.

“Overall, we have shown quite a bit of resistance above, so I think at this point what we are going to do is see a lot of choppiness,” Lewis said. “A bit of consolidation might be the best way to go going forward, but if we break down below the 50 day EMA then I think we go looking towards the $17.00 level. With that being the case, I think that you will need to be very cautious about jumping ‘all in’ when it comes to this market, but I do think that there are enough tensions out there that we will eventually see a bit of a boost for precious metals in general, which of course will have an influence on silver itself.

If investors do want to play the silver market, it’s best to be equipped with a cast-iron stomach. For those who can handle the bumpy ride, they could be handsomely rewarded in the long-term.

“I am bullish longer term but recognize that a pullback may be necessary in the short term, as tensions have calm down between the United States and Iran, and of course the Americans and the Chinese,” Lewis added. “Given a bit of time though, it will all come back and we will continue to see safe-haven buying.”

ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver.

For more market trends, visit ETF Trends.