Silver consolidates beneath $25.00 level following choppy Asia Pac session

Spot silver prices (XAG/USD) have for the most part been capped below the $25.00 mark in recent trade, with price action mostly sticking close to the metals 50-day moving average at $24.90. Volatility has subsided significantly following what was a very choppy start to Monday Asia Pacific trade; shortly after the reopen of trade, spot silver prices dropped sharply to lows just above $24.00, before abruptly reversing back towards the $25.00 mark, around which prices have consolidated. At present, the precious metal trades with modest gains of about 0.8% or about 20 cents.

Given US market closures amid MLK Day holidays, volumes are already thin and will get thin upon the exit of European participants from the market from 16:30GMTish, only then to pick up from around the start of the Tuesday Asia Pacific session. Spot silver prices are higher despite a broadly stronger USD.

DXY grinding towards 91.00

USD has picked up where it left off at the end of last week and is seeing further, albeit gradual upside on Monday. No specific fundamental drivers seem behind the move; perhaps there is still some caution regarding the worsening state of the Covid-19 global Covid-19 pandemic; the WHO spoke on Monday about how they expect global daily deaths to reach over 100K within the coming days. Meanwhile, China reported more than 100 Covid-19 cases for the sixth day in a row, contributing to rising fears that cases will see significant acceleration when millions of Chinese people travel to spend Lunar New Year holidays with their families. 29 million people are currently already living under lockdown in the country.

Stronger than expected Chinese GDP numbers for Q4 (in which the economy grew at a YoY rate of 6.5% versus expectations for an annualized growth rate of 6.1%) failed to weigh significantly on the US dollar via a lower USD/CNH. Indeed, USD/CNH trades about 0.2% higher but is still below 6.5000.

Perhaps also contributing to the somewhat tentative market tone are reports US President-elect Joe Biden might have to scale back spending plans and increases to the minimum wage given a divided government and potential opposition from moderate Democrats (said Wall Street Democrat sources cited by Fox Business News reporter Charles Gasparino).

Either way, slight USD strength has done little to dent sentiment towards precious metals. More convincing price action will likely have to wait until Tuesday, when US flow returns after the long weekend.

Spot silver key levels