- Bulls seek an upside recovery while uncertainty in markets prevails.
- Gold & silver ratio (AUG/USD) points to a continued bull correction for silver.
- Fed likely to hold and repeat patients due to improved economic data.
Silver prices are making a modest comeback on Tuesday as investors grow tired of the bombardment of positive spin in Sino/US trade headlines without any actual substance to them nor action coming through from behind the scenes. At the time of writing, spot prices are 0.36% higher trading at 16.66 having travelled from a low of $16.57 to a high of $16.71.
The overall climate is one of uncertainty, and that will always favour the precious metals as investors seek out liquidity and a safe haven. Meanwhile, the Federal Reserve and the US dollar will be the next major focus, but not least, so too will be the US Consumer Price Index – rising inflation will likely be a bonus for gold and silver.
For the meantime, the Sino/US trade deal headlines are wearing thin as we fast approach the 15th December deadline this weekend that will determine whether there is a trade deal or new tariffs on Chinese goods – Commerce Secretary Wilbur Ross said in an interview Monday that the U.S. would go ahead on tariffs on another wave of Chinese goods if there was no deal with China by Dec. 15. However, there have been some suggestions that tariffs will not go ahead, so as ever the headlines are conflicting and investors are growing tired of the lack of clarity, which is bullish for silver.
Gold/silver ratio points to higher silver in the near-term
The gold and silver ratio is -0.13% at the time of writing having travelled from a high of 88.06 to a low of 87.82 although is trading above its 200-day moving average still, located at 86.70. However, when considering the rules for a rising wedge, it would appear that the ratio has met the resistance and is due for a downside correction, at least to the rising support which will be testing the 200-DMA. Such a move will likely propel silver towards its 21-DMA up in the 16.90s vs the greenback.
FOMC now in focus
Federal Open Market Committee and the Federal Reserve's interest rate decision will be a focus this week where rates are expected to remain steady at 1.50-1.75%.
The US dollar could find some demand should the Fed highlight the recent Nonfarm Payrolls data and a tendency to stay put for the foreseeable future. "We don't anticipate any dissents next week for the first time since May. Statement and dot-plot shifts are well anticipated," analysts at TD Securities argued, adding:
"A propensity to compel major FX shift is low at this time of year. Powell's tone in the press conference should diverge from a cautious ECB (the next day), and should modestly support the USD.
|Today last price||16.67|
|Today Daily Change||0.07|
|Today Daily Change %||0.42|
|Today daily open||16.6|
|Previous Daily High||16.68|
|Previous Daily Low||16.53|
|Previous Weekly High||17.3|
|Previous Weekly Low||16.54|
|Previous Monthly High||18.22|
|Previous Monthly Low||16.61|
|Daily Fibonacci 38.2%||16.62|
|Daily Fibonacci 61.8%||16.59|
|Daily Pivot Point S1||16.52|
|Daily Pivot Point S2||16.45|
|Daily Pivot Point S3||16.37|
|Daily Pivot Point R1||16.68|
|Daily Pivot Point R2||16.76|
|Daily Pivot Point R3||16.83|
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