Silver Price Daily Forecast – Fed’s Monetary Stimulus Sets The Scene For More Upside

Silver Video 10.04.20.

Silver Rises As Central Banks Continue To Inject Liquidity At Unprecedented Pace

Silver prices continue their upside following the U.S. Federal Reserve announcement of a $2.3 trillion stimulus program. The monetary stimulus measures during the current coronavirus crisis are counted in trillions, which is a bullish factor for precious metals.

Not surprisingly, the U.S. dollar lost ground on the news, and the U.S. Dollar Index fell below the psychologically important 100 level. However, other countries also implement various monetary stimulus measures, so dollar downside potential may be limited.

The biggest beneficiary of the recent developments is gold which is investors’ first choice among precious metals. However, silver also has good chances to benefit from world-wide money printing as investor money will likely flow into the whole precious metal sector.

Industrial demand plays an important role in silver demand structure so the current crisis will put some pressure on this front. However, investment demand may pick up and provide silver with more upside.

It remains to be seen whether silver can maintain strength in case of general market downside. The active phase of the earnings season is around the corner, and there are risks that even the unprecedented monetary stimulus won’t be able to support the market as it faces negative economic data.

So far, silver often moved together with equity markets. However, past performance does not guarantee future results, so silver may follow its own path in case of general market downside.

Technical Analysis

Silver is currently located in a range between the 20 EMA at $14.80 and the 50 EMA at $15.65, creating a very interesting setup for the next week. The 20 EMA serves as a material support level which has already been tested several times.

If this level is breached to the downside, silver will get back to the $13.80 – $14.70 range. However, I continue to expect that silver may receive some additional support in the $14.30 – $14.60 area.

Meanwhile, if silver manages to settle above the 50 EMA level, it will be able to to complete the current rebound and return to pre-crisis levels at $16.50. It remains to be seen whether the upside momentum will be sufficient enough for silver to get above pre-crisis levels in the near-term, but, with the right catalysts, it can even re-test yearly highs in the upcoming months.