Silver Prices Plunge Nearly 2% Amid Technical Reversal, Dollar Recovery

London (June 1)  Silver prices declined sharply on Thursday, as the metal ran into technical resistance following a multi-week rally.

July silver futures declined 31 cents, or 1.8%, to $17.10 a troy ounce at 7:17 a.m. ET. The futures price fluctuated within a range of $17.03 and $17.37 through the overnight session.

The metal ran into immediate resistance near $17.42, which corresponds with the 50% Fibonacci level extending back to the April high.

Despite the recent run on resistance, day traders continue to buy on the dips. This suggests the grey metal is likely to find strong support between $17.00 and $17.25.

Silver prices have experienced significant volatility over the past 12 months. Volatile price patterns are expected to continue for the foreseeable future, according to a broad view of market analysts.

Gold prices fell from nearly five-week highs Thursday. The August futures contract stumbled $7.80, or 0.6%, to $1,267.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold’s premium over silver rose on Wednesday to 73.24. That’s how many ounces of silver are needed to buy just one ounce of gold. The ratio was as high as 75.86 earlier this month.

Precious metals traders have been encouraged by a renewed slump in the U.S. dollar this week despite growing evidence the Federal Reserve will raise interest rates at its next policy meeting. The dollar index was last seen trading at 97.15, having gained 0.2% from the previous close.

U.S. rate-hike expectations have been a major catalyst behind the dollar’s multi-year bull market.

The Federal Open Market Committee (FOMC) kicks off its next meeting in two weeks’ time.

Source: EconomicCalendar