Silver Prices Catapult Higher Following A Softer Dollar
- Silver prices gain as the Dollar retreats.
- From a technical perspective, the rise in silver has disrupted bearish momentum following the May 4 break to the low of $17.17 on Monday.
- Prices are trapped between the May 6 high of $17.56 and May 9 low of 16.88.
Silver prices have gained almost 4% over the last 34 hours and, at the time of writing, also challenged the May 6 high of $17.56.
There was little news on what has triggered the rise on silver, but the business press reports that the soft USD had increased the demand for precious metals like silver. The USD is softer against all of its G10 peers, with the exception of the GBP, which was down by 0.05% in today’s trading.
From a technical point of view, the rise in silver has disrupted the bearish momentum to silver prices following their break to the May 4 low of $17.17 on Monday. Ideally, for the bearish momentum to remain intact the price would have had to correct part of its decline from the May 6 high of $17.56 to the May 9 low of $16.88, rather than silver having now regained almost all of its losses. This has neutralized the bearish momentum.
In future and on price remaining capped by the May 6 high of $17.56, it could be argued that the trend will continue sideways. While the May 6 high of $17.56 is currently capping price, this week’s low of $16.88 is supporting it. Resistance levels above the May 6 high are the April 5 high of $17.61, followed by the May 3 high of $17.70. Support below this week’s low is the April 25 low of $16.78.
There are no U.S. market moving events on deck this afternoon, with the exception of the weekly U.S. Crude Oil Inventories, which might influence the Dollar and thereby affect silver. A Bloomberg News poll projects an inventory build of 750k barrels vs. the 2.784m build of last week.
Our forecasts for Q2 2016 are now live on the site. Download them for free.
Silver Price | CFD: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00