Silver Price Daily Forecast – Major Rally In Gold Supports SilverMajor rally in gold helps silver breach the $13.00 resistance and get above $14.00.
Weaker Dollar And Unlimited QE Help Silver Get Through The $13.00 Resistance
Silver breached the $13.00 resistance and quickly rose above the $14.00 level as optimism returned to the markets due to Fed’s unlimited QE and U.S. President Trump’s desire to reopen the economy as soon as possible.
Gold had an especially spectacular rally and almost breached the $1700 level. As I previously noted, silver needed upside in gold to have a chance for a material upside move.
The U.S. Dollar Index also helped as it is corrected from the 104 area closer to 102, highlighting the U.S. dollar weakness against a broad basket of currencies. Dollar weakness helps silver as the metal becomes more affordable for buyers who have other currencies.
The optimism is widespread in many asset classes today, and silver benefits from positive investor mood. That said, investors and traders in silver will have to monitor the coronavirus situation closely since the market mood can quickly change if new data points to new restrictions in the future.
Generally, the current financial situation is positive for silver since the biggest central banks have set their rates close to zero, while some rates are in the negative territory. This environment is positive for precious metals that don’t pay interest since the opportunity cost of investing in them decreases.
Now that silver has breached both the $13.00 and the $14.00 resistance levels, it will have to hold above $14.00 in order to continue the current upside move without a meaningful pullback.
In the other case, silver will likely have to settle in the $13.00 – $14.00 range, and a test of the $13.00 support will be possible.
In case the former resistance at $14.00 becomes the new support level, silver will have a material chance to get to the next resistance at 50 EMA near $15.00. I’d note that gold prices have already returned to their pre-crisis levels, while silver has yet to get anywhere close to $17.00.
In this light, the catch-up potential in silver remains intact, but investors and traders should note that silver has been receiving much less support than gold in recent times, so it’s hard to expect that silver will simply copy gold’s moves with a time lag.