Forex Analysis & Reviews: 02.02.2021 - Failed to hold position:...

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02.02.2021 02:19 PM

Failed to hold position: silver's popularity is quickly fading

The price of silver has slightly retreated on Tuesday following its notable rally on Monday. It should be noted that this is not a significant drop, but only a necessary correction, which is indispensable for a powerful breakout that occurred. Gold price is also falling, supporting the downward trend indicated by silver. However, this situation in the precious metals market cannot be considered serious yet.

Gold futures contracts for April delivery sank 0.35% or $6.8, to $1857 per troy ounce. At the same time, support turned out to be around $1835.6 per troy ounce, and resistance at $1878.9 per troy ounce.

Silver futures for March delivery on the New York trading floor dropped 2.76%, to $28.605 per troy ounce. On Monday, silver consolidated above $30 per troy ounce, but on Tuesday, it has retreated from its maximum indicators, which were last recorded almost eight years ago. Thus, the growth of 15% in just one day almost came to naught overnight.

Copper futures contracts for March delivery, on the contrary, gained 0.01%, which sent the contracts to the level of $3.5515 per pound.

Recall that yesterday's excitement in the precious metals market, particularly in the silver sector, was because a group of proactive private investors began to artificially cause a rapid rise in the cost of metals using the online platform Reddit, which aroused even greater interest in purchases over the past day. Silver was especially popular, but other metals followed it up. It is also noteworthy that not only futures contracts for silver grew in price, but also the securities of companies that are engaged in its production. In fact, it all started with the rise in stocks. However, everything ended just as quickly, which suggests that all this was only a temporary phenomenon, which will come to naught literally the other day.

Nevertheless, Monday's hype reminded small investors that the silver market is much broader than they think of it and that it can be very successful to work on it. However, the very fact that the purchases of shares of mining companies and the silver futures themselves are carried out in small volumes cannot provide the metal as a result of stable and long-term growth. This is exactly what the events on Monday and Tuesday have demonstrated: after reaching a record level, the precious metal also turned sharply and began to lose its positions.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.