Silver has been crushed during the trading session on Friday as interest rates have jumped pretty significantly.
By doing so, it is now a situation where silver is testing the crucial 200-day EMA.
The 200-day EMA of course is an indicator that a lot of people will be watching very closely.
We are below the $70 level and really at this point in time, I had previously stated that the $70 level was important and then the 200-day EMA. If we were to break down below there, it could be a very ugly turn of events for silver.
Interest Rates and Monetary Policy Impact
Interest rates in the United States have climbed towards 4.55% during the day with the market reacting to the jobs number coming out twice as much as anticipated, catching the XAG/USD market off guard on Friday.
Top Regulated Brokers
This has people looking at the Federal Reserve through the prism of a central bank that may not be able to loosen monetary policy anytime soon, and one thing crushes silver more than anything else, and that's higher interest rates. Yes, there is plenty of demand for silver, but at the end of the day, it is a non-yielding asset, so traders, not commercials, but traders like us, short it.
I think ultimately, you've got a situation where the close business on Monday is crucial. I would not try to front run anything here. Watch the 10-year yield; if it starts dropping, that should be good for silver. If it starts rising again, we're probably going to the $60 level before it's all said and done.
Ready to trade our daily forex analysis and predictions? Here are the best Silver trading brokers to choose from.