Silver for immediate delivery, which tumbled into a bear market yesterday, may decline toward $26 an ounce, a level last traded in 2010, according to Barclays Plc.
The metal’s close below a support level of $27.95 an ounce yesterday will prompt technical selling and pressure prices, Dhiren Sarin, chief technical strategist for Asia Pacific, said today by phone from Singapore. Since the beginning of 2011, spot silver has tested the $26 level four times and managed to stay above that, making it a key support, he said.
Silver entered a bear market yesterday when it closed more than 20 percent below an Oct. 4 high. The reading on the 14-day relative strength index was 24.55 today, below the level of 30 that’s taken as a signal of a possible rebound.
“Silver is oversold on daily and weekly charts but often this can be ignored when the price is lacking signs of a base,” Sarin said. “A price level at $26 is now in the spotlight.”
Cash silver fell as much as 1.3 percent today to $26.925 an ounce, the lowest level since July 25, before trading at $26.935 by 2:36 p.m. Singapore time. That extended this year’s losses to 11 percent.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where analysts anticipate orders to buy may be clustered.