XAG Rally Continues

Silver prices are continuing to push higher this week with silver futures breaking out to fresh highs for the year today. The market has been well supported in recent weeks, drawing strength from the rally in gold, Fed easing expectations and better data out of China.

Fed Easing Expectations

With the Fed widely expected to push ahead with fresh easing this year, silver prices have seen a firm shift in sentiment since the start of the year. While there is still uncertainty around when such easing will likely begin, the Fed’s recent reaffirmation of its projected path of three rate cuts this year has kept silver firmly bid. Indeed, commenting yesterday, Fed’s Bullard reiterated that the bank’s base case view is for three rate cuts this year.

What to Watch This Week

Looking ahead this week, traders will be closely watching the latest US inflation report tomorrow which holds the potential to drive the rally further if we see any undershooting of forecasts. Along with that data we also have the latest FOMC minutes due tomorrow as well as PPI and the ECB rate decision due on Thursday, meaning plenty to watch this week for silver traders. Any easing signals from the ECB should also help support silver via a fresh lift in gold prices as traders look for better stores of capital against falling real rates.

Technical Views

Silver

The rally in silver has seen the market breaking above several key levels, now testing the bearish trend line from last year’s highs. While above 26.9863 and with momentum studies bullish, the focus is on a continuation higher and a test of the 29.9383 level next. 

(Click on image to enlarge)

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