Silver Surges Despite Death Cross Pattern

Silver powered higher in early trading on Tuesday, extending gains from Monday. The move came after the US Federal Reserve effectively pledged to do whatever it takes to prop up the US economy. The unprecedented Fed action slowed down the scramble for cash that has been driven by panic and the liquidation of positions due to margin calls.

The historic new program from the Fed includes a commitment to unlimited bond purchases, billions in corporate loans backstopped and the extension of credit to small and medium-sized businesses. The Fed stated: "The coronavirus pandemic is causing tremendous hardship across the United States and around the world" adding that "aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes to promote a swift recovery once the disruptions abate." The Fed news was not sufficient to lead to gains in US stock indices on Monday, but Asian and European markets are trading higher early on Tuesday.

According to data from Johns Hopkins University, at the time of this writing the total number of confirmed Coronavirus COVID-19 global cases has risen to 383,944 and 16,595 deaths. The World Health Organization (WHO) has warned that the coronavirus disease pandemic is accelerating. At a press conference on Monday, WHO Director-General Tedros Adhanom Ghebreyesus said: “It took 67 days from the first reported case to reach 100,000 cases, 11 days for second 100,000 cases, and just four days for the third 100,000 cases.”

Curiously, a bearish death cross pattern (50 period MA crossing below the 200 period MA) has formed on the daily chart after silver bounced from the lows made on March 18th. Support lies at the prior low of 11.60, while the 38% Fibonacci retracement of the recent swing at 14.41 represents potential resistance above. Normally safe havens in times of crisis, both gold and silver sold off during the financial crisis of 2008, before entering multi-year uptrends.