The plunge in gold prices yesterday, rocked the markets with the precious metal shedding over $30 per ounce in the futures market as the big operators finally triggered the move in a classic pump and dump operation. Where gold goes, silver follows, and it was no surprise to see the industrial metal following the precious metal lower, although the move was less savage, closing on the September futures at $20.91 per ounce with a wide spread down candle on the daily chart.
Volume on the day was above average, but certainly not the extreme volumes seen for gold as the metal moved back into the congestion phase of the last few weeks, with the clearly defined support region now in place at the $20.70 per ounce level. To the upside, the secondary resistance region is again well defined in the $21.55 per ounce region, which helped to bring the bullish move higher to a shuddering halt. Should the $20.70 per ounce level be breached as expected, then silver looks set to test the more developed support level at $20.40 per ounce, and once through this level, $19.40 per ounce is then increasingly likely to be tested in the medium term.
By Anna Coulling