Upside Likely For Silver?
2022.04.06 11:12
Silver against the US dollar (XAG/USD) has had a lukewarm start to the quarter like various other industrial commodities and hovered around $24.60 for several days. Fundamentals are generally mixed, with hawkishness from the Fed amid high inflation priced in. At the same time, uncertainty remains around possible further European sanctions against Russia and ongoing anti-Covid restrictions in important Chinese industry centers.
A simple way to look at silver is that it hasn’t gained as aggressively as gold in reaction to the war in Ukraine. It moves due to mostly different drivers from those of gold, but silver’s popularity as an investment remains high. Relaxation of anti-Covid measures in China combined with a possible renewed focus on inflation could drive the price higher more readily than gold.
Silver price chart.
The 23.6% weekly Fibonacci retracement area seems to be an important support, below which the price is unlikely to decline unless there’s a significant net inflow of selling volume. This area, around $24.60, was the peak in the middle of January and the source of the fake-out on the first day of the Russian invasion of Ukraine.
Apart from sentiment and macro events in markets, traders of silver are analyzing the Fed’s latest minutes, released on Apr. 6, and the likelihood of a two-step hike, now about 75%, by the FOMC on May 4.
