Silver prices pair losses, eye retest of $24.00

Having found support at the 19 November low in the $23.60s, spot silver (XAG/USD) prices are again trying the wrestle their way back above the $24.00 level. As things stand, silver trades just under $23.90, or only about 0.6% lower on the day.

Bargain hunters supporting silver

After falling to its lowest level since September at the start of this week of briefly below $22.00, spot silver has surged nearly 9% (from lows). Bargain hunting appears to have been the main factor behind the recent, drastic improvement in the precious metal’s sentiment.

The bullish argument that accommodative central banks (good for precious metal demand as an inflation hedge) and low real interest rates for the foreseeable future (as inflation picks up during the recovery but central banks keep interest rates low, increasing the attractiveness of precious metals versus fixed income) are likely to continue to provide some support to the precious metals market.

Note that despite this week’s near 9% reversal from lows, XAG/USD is still yet to erase last week’s steep losses. To do so, the precious metal will need to rally convincingly back above the $24.00 mark.

Silver struggles to contend with 21 and 50DMAs above $24.00

Spot silver prices have rallied back to just under the $24.00 mark, but the path to the upside is blocked by the 21 and 50-day moving averages, which sit right next to each other between $24.03-$24.05. The precious metal was only very briefly able to rally above these levels earlier on in the session, and has struggled to hold above the 50DMA for most of the past month (since Pfizer/BioNTech announced their vaccine success on 9 November).

To the downside, significant support resides between $23.55-$23.64 (the 9 and 19 November and Wednesday Asia session lows). This area is likely to continue to offer decent support, but should it go, a swift move back to the $23.00 mark cannot be ruled out given a lack of significant support in the interim.  

XAG/USD four hour chart