Silver prices buoyant above $24.00 as USD slides to fresh annual lows
|- A bout of technical buying has seen XAG/USD prices move back above the $24.00 level in recent trade.
- USD weakness amid an improvement in the market’s broad appetite for risk is likely acting as supportive.
Spot silver (XAG/USD) prices have seen some technical buying in recent trade, but remain broadly underpinned by a softer USD as a result of an improved risk appetite at the start of the week. Indeed, the Dollar Index (DXY) recently slid to fresh annual/multi-year lows beneath 90.50. At present, XAG/USD is up about a percent on the day or a little under 25 cents and is trading to the north of the $24.00 level.
USD slides as risk appetite receives a boost
A couple of factors are boosting risk appetite (and hurting USD) on the first trading day of the week; firstly, the FDA approved the Pfizer/BioNTech vaccine for emergency use over the weekend and, secondly, UK PM Boris Johnson and EU Commission President Ursula von der Leyen agreed over the weekend to continue Brexit talks (though GBP rallied on this, it does not by any means guarantee a deal).
Risk appetite has not reacted much to negative news on the European lockdown front; Germany is set to introduce more stringent restriction through to January, the Netherlands just announced that it is going to follow suit, and over in the UK, London is set to be bumped into the highest Covid-19 alert category (Tier 3), which could happen as early as today. Markets are still seemingly more focused on the “light at the end of the tunnel” narrative as vaccines are rolled out.
Either way, USD weakness is seemingly offering the precious metal complex some support on Monday. Admittedly, gold still trades in the red, but losses are arguably less given negative USD flows, and silver trades in the green.
Technical buying pushes XAG/USD back above $24.00
A bout of technical buying on the break of a short-term downtrend linking the 9, 10 and 11 December highs has seemingly helped spot silver prices reclaim the $24.00 level. But looking at the precious metal over a longer time horizon, silver still trades well within recent ranges. To the upside, there is decent resistance in the $24.30s-$24.40s area, while to the downside, the bottom of the recent range comes into play just before the $23.50 level.
XAG/USD one hour chart
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