Silver price upside contained by 21 and 50DMAs, slips back below $24.00

  • Further weakness in the US dollar has not been enough to lift spot silver prices beyond the $24.00 level.
  • Prices are consolidating within a $23.80s-$24.20s range as markets take a breather from recent big moves.

Spot silver (XAG/USD) prices trade with losses of nearly 1.0% or just around 20 cent at the start of the US trading session, but the precious metal continues to look rangebound either side of the $24.00 level.

Silver struggles to emulate gold gains

US dollar downside is yet to abate, with the Dollar Index (DXY) on Thursday trading with losses of nearly half a percent, meaning the index is down over 1% on the week. No particular headline or theme can be pinpointed as behind recent dollar downside, with vaccine and US fiscal stimulus optimism like a factor, as well as a reignition of Brexit hopes (a deal on level playing field, one of the key three sticking points, is reportedly close) which has boosted GBP (at the expense of USD).

Gold is enjoying the softer USD conditions and is trading 0.5% higher in the $1840s. Spot silver is, however, not sharing this joy. A few technical factors seem to be preventing XAG/USD prices from advancing to the upside today;

Firstly, silver prices are already up nearly 6% in the week. That compares to gains in gold of under 3%. Silver does, of course, have a higher beta than gold, but it is likely not too surprising to see gold playing catch up slightly after underperformance earlier in the week.

Secondly, XAG/USD is having further gains blocked, for now, by its 21 and 50-day moving average (DMA). Spot prices currently sit just below the 21 DMA at $24.05 and the 50DMA at $24.07, and have struggled to rally more than 20 cents above this area of resistance in over the last 48 hours.

Silver consolidates within recent intra-day ranges

Silver prices are currently consolidating within recent days ranges. To the upside, the $24.30 area has proven tough resistance, capping the price action on Thursday and Wednesday. Should this area break, further to the upside is the 20 November high just above $24.50.

Meanwhile, to the downside, there is are a few solid areas of support. Most immediately there is the $23.80 area, which has provided a floor to the price action throughout Wednesday. Below that, there is the Wednesday early US session low around $23.65, which also coincides with the 19 November low. Below that, there is the Wednesday low at $23.55 and the last Tuesday and Wednesday highs at $23.53.

XAG/USD one hour chart

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