Silver slips back below $26.00 in more consolidative trade conditions

Spot silver prices (XAG/USD) are consolidating below the $26.00 level, in what has been for the most part quiet Tuesday trade. The precious metal saw significant selling pressure overnight that resulted in a drop from above the $26.50 mark to lows around $25.50, amid a seeming lack of any fundamental catalysts. Currently, XAG/USD trades lower by about 1.6% or just over 40 cents on the day, but only trades with very marginal losses on the week.

USD has retained a sticky bid and is one of the best performing G10 currencies on the day, with the Dollar Index (DXY) still supported above the 90.00 level – this is keeping precious metal upside capped for the time being. Conversely, real US yields have been dropping in recent trade, with the 10-year TIPS yields dropping from pre-US session highs above -1.01% to current levels below -1.03%, which out to give the precious metals complex some mild support.

In terms of how silver will trade for the rest of the week; things are likely to get more subdued given that more and more European and North American participants are exiting the market for Christmas celebrations and that the US Congress has already voted on and passed a fresh round of fiscal stimulus. Brexit and pandemic-related volatility is of course still something to consider, but trading conditions are unlikely to be as volatile as they were on Monday when XAG/USD swung between highs around $27.50 and lows around $25.00.

XAG/USD shops through key zone area, where next?

XAG/USD has this week chopped through and pretty much now rendered meaningless what was at one point an important zone of support/resistance, the $25.80-$26.10 area (late August and early-September lows then November highs). Seemingly then, that means that spot silver has carved out a new range, with support in the $25.00 region to the downside and resistance in the $27.60s to the upside, just above Monday’s high at $27.40. Back to important downside levels; below Monday’s $25.00ish lows are the 21 and 50-day moving averages at $24.21 and $24.29 respectively, which come into play just ahead of a long-term downtrend linking the August, September, November and early December highs.