Silver Price Daily Forecast – Fed’s Announcement Of Unlimited QE Helps Test The $13.00 Level

The Fed Helps Almost All Asset Classes

The most important catalyst for all asset classes today is the U.S. Federal Reserve decision to expand its quantitative easing program. Due to the severity of the coronavirus crisis, the Fed decided that it will not set any limits to its market support program.

This news is bullish for the absolute majority of assets since it guarantees that more money will be pumped into the financial system. The biggest loser from the announcement is the U.S. dollar. In my previous article, I noted that silver needed a pause in the U.S. dollar upside to have a real chance to go up, and now this pause is provided by the Fed.

It remains to be seen how long the enthusiasm will last because the coronavirus crisis is getting worse day by day. At this point, silver needs general optimism in the markets because any panic selling means that investors also liquidate their silver holdings.

In recent trading sessions, silver prices were trying to secure a bottom in the $11.70 – $12.00 range, and the Fed decision is a timely help for the bottoming process. However, I’d note that the Fed has fired its biggest shot and it has nothing comparable left in its ammo. From now on, silver and other assets cannot expect additional positive news of this magnitude, so further improvement should come from the coronavirus front.

Technical Analysis

Silver continues to trade in the $12.00 – $13.00 range. The precious metal receives significant support in the $11.70 – $12.00 area, while the $13.00 level presents a material resistance.

The key near-term intrigue is whether silver will be able to breach the $13.00 resistance and hold above this level following the Fed’s announcement of unlimited QE. If this happens, silver will be headed towards the next resistance at $14.00.

In the opposite case, silver will face additional problems since investors and traders will take the inability to settle above $13.00 on such positive news as a sign of material weakness in silver. In this scenario, the $11.70 – $12.00 support level will likely be tested again. Silver has left the deeply oversold territory, so additional downside in the negative scenario is surely possible.