Silver tumbled more than 7% on Monday as precious metals sold off in response to positive coronavirus vaccine news, which investors interpreted as good for the economy.

“The initial reaction was that stimulus may not be necessary,” RJO Futures senior commodities broker Daniel Pavilonis told Kitco News. “With a vaccine, we have a way to change the dynamic of the way everybody is living post-COVID. Maybe everyone can go back to work, or maybe there is less economic risk. Maybe pent-up purchasing picks up.”

Monday’s price action has seen an unwind of the pandemic-era trades, said TD Securities commodity strategist Daniel Ghali.

“Vaccine is seen as opening the door to other assets that haven’t performed as well during the pandemic. The market is selling the winners and buying some losers. During the pandemic, gold and silver were popular investment haven vehicles,” Ghali said.

This comes as Pfizer Inc said that its experimental COVID-19 vaccine was more than 90% effective.

At the time of writing, December Comex silver has seen a bit of a recovery, last trading at $24.29, down 5.35% on the day.

Silver followed gold down on Monday, said LaSalle Futures Group senior market strategist Charlie Nedoss. After the selloff in silver, “the technicals began to firm up,” Nedoss said.

Also, gold’s ability to hold on to $1,850 has helped silver out, Nedoss added. “Silver hasn’t even taken out last week’s low. It is seeing some short-covering.”

Another reason why silver is is not lower is its industrial component, analysts said. “Silver is holding on because of its industrial component and its uses. That’s the difference between gold and silver,” Nedoss said.

A key technical level to watch in silver is the 100-day moving average at $23.59. If silver breaks that, it could go down to $21.50, said Pavilonis.

Another important level to watch is $24.24, noted Nedoss. “Technically, watch the day session close. The $24.24 level is a big mark.”

Bullish sentiment remains

Overall, the vaccine news does not change the bullish environment for precious metals, Pavilonis noted.

“Once we start to look at when this might be implemented. Are whether people are going to want to take the vaccine. It will be questionable,” he said.

On top of that, Joe Biden winning the presidential race points to more bailouts in the future. “Stimulus is still in the cards,” Pavilonis added.

The vaccine does not mean the world economy is out of the woods yet, he stated. “There has been a lot of damage done to the economy. Even with a vaccine, things are not going to get back to normal. The amount of money that has been printed is going to have an inflationary effect on things. Unlike quantitative easing, this is like money literally being printed up and given out. I think the move in the metal to the upside is not over.”

Silver could even get hit $30 fairly quickly if a Democrat-sized stimulus package is eventually passed. “The moves we saw today in stocks, we’ll see a move like this in silver on the upside if the bailout package passes,” said Pavilonis.

Longer-term, vaccine news is a price-positive for precious metals, Ghali pointed out.

“Gold and silver are inflation hedge assets. As the vaccine is implemented, it will help the world recover, help growth re-enter into the status quo from the past. These are tailwinds for inflation expectations as higher growth elicits higher inflation expectations. And the Fed is not going to look to stem those inflation expectations. This is a positive for gold and silver,” Ghali said.

Ghali noted that TD Securities sees silver averaging $26 during Q4 and then rising to $30 by the end of 2021.