Silver bulls again keep metal supported above the $25.00/oz level

• Spot silver is nursing a decent recovery after rebounding strongly again in the low $25.00s.
• The weaker USD that would result if a Brexit deal is agreed could lift spot silver prices back to Monday highs near $27.50.

After a volatile Monday that saw prices swing between highs at nearly $27.50 to lows just below $25.00, spot silver (XAG/USD) dumped on Tuesday, hurt by a strengthening US dollar that saw the Dollar Index rally to highs above 90.70 from previously closer to 90.00. By the start of Wednesday’s Asia Pacific session, XAG/USD was trading just above the $25.00 level, with Monday lows at $24.96 only a stone's throw away.

However, since then, USD has pulled back amid an improvement in the market’s broader appetite for risk, as well as Brexit optimism that is giving a big boost to GBP (at the expense of USD). Spot silver prices have thus reclaimed the $25.50 level and now trade with gains on the day of over 40 cents or over 1.7%.

$24.90-$25.10 support zone prevails again, move back to $27.50 on the cards?

As noted above, spot silver has again found solid support at the $24.90-$25.10 support zone, which contains the 16 November and 8 December highs and this week’s lows, as well as the psychological $25.00 level. In terms of upside levels, there really is not too much by way of resistance ahead of the Monday high just under $27.50, though $26.00 might offer some resistance.

Brexit news flow is looking much more suggestive that a deal is about to be announced; ongoing Brexit angst over the previous weeks and volatility in GBP has been one key factor keeping a bid under the USD. With a deal in sight, the Dollar Index (DXY) is likely to retest recent lows in the 89.70s and who knows how much lower than that it could go. Given silver’s negative correlation to USD, this might be just what the precious metal needs to rally all the way back to Monday highs close to $27.50.

XAG/USD daily chart