Silver price has formed an inverted cup-and-handle pattern.
The iShares ETF has had substantial inflows recently.
Silver is benefiting from the falling bond yields.
Silver price held steady at $57 on Monday, helped by the strong Chinese macro data, the falling US bond yields, and ETF inflows. XAG has risen by 4.3% from its lowest level this month. Still, technicals suggest that silver has more downside to go in the near term as it has formed an inverted cup-and-handle pattern.
Silver Price Jumps as Key Catalysts Align
Silver, the second-most popular precious metal, rose after China published encouraging macro data. According to the statistics agency, the economy expanded by 4.5% in the third quarter, a modest improvement from the previous 4.3%. This figure was higher than the expected 4.4%.
China’s industrial production rose 5.5% in September, also higher than the expected 5.4%. These numbers are important for silver because it is a major industrial metal used to make products like kitchenware and semiconductors.
Silver is also rising as energy prices retreat. Brent, the global benchmark, dropped by 1.22% to $108.5, while the West Texas Intermediate (WTI) fell to $98.3. As a result, this retreat led to a drop in government bond yields, with the ten-year falling to 5.08%. The five-year yield fell to 4.88%.
Silver and gold are affected by the bond market because they are non-yielding assets. As such, with bond yields falling, silver is becoming more attractive. Indeed, data shows that American investors have started to rotate back to silver ETFs.
The iShares Silver ETF (SLV) added $256 million on October 14, its biggest single-day jump since September 21. In total, the fund has added over $448 million in inflows in the last 30 days, bringing its assets under management to $29 billion.
Looking forward, silver will react to the performance of the oil market. Oil prices may rebound as Iran continued shooting ships attempting to cross the Strait of Hormuz.
Silver Price Technical Analysis
XAG chart | Source: TradingView
On the charts, silver has been in a downward trend, which stalled after bottoming at $55. This was an important level as it coincided with the lowest level in July this year.
A closer look shows that silver has formed an inverted cup-and-handle pattern. It is now at the handle section of this pattern. At the same time, silver has remained below the 50-day moving average and is along the Strong, Pivot, Reverse of the Murrey Math Lines. Tool.
Therefore, the path of the least resistance for silver is bearish, with the next target being Murrey Math Lines’s ultimate support of $50.
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