Weekly Commodities Review - 03 November

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In recent weeks we have looked mainly at Gold and Oil so this week we will take a look at Silver.

The weekly chart shows how price action recovered sharply from the pandemic lows early in 2020, posting highs close to $30. Since then, the market has retraced around 50% of this move. As is so often the case with major moves like this the 50% can become a “natural” resting area as the market digests if the start, or end, of this move was “correct”.

Moves under the 61.8% greatly increase the chance of a full retracement, and so far price action has stayed well above the $16.6 area and has consolidated around the $19. After major moves like this price action can get caught in a range around the 50% retracement, often times with the 61.8% and 38.2% levels acting as the outer boundary.

So in the near-term price action could build towards $21.7 and still be within this consolidation area. Moves much above $22 would give confidence to the buyers that the initial moves to $29.9 were “correct” and just a case of too much too soon.

Due to price action seemingly posting a solid consolidation around the 50% level, and not threatening the 61.8% support, the longer-term outlook is skewed to the positive, both for minor rallies towards $21.7, and potentially on upwards back to the summer 2020 highs. Only moves under $16.6 would turn the outlook more outright negative. As this would suggest the global economic outlook was turning worse and affecting industrial demand as much as was feared at the peak of the pandemic in early 2020.