Silver Price Forecast: XAG/USD Breakout Stalls At Key Resistance

Silver prices are battling a key resistance after rising more than 2.5% in yesterday’s session. This was following the move in gold prices as the resurgence of COVID-19 cases in some parts of the world is dampening prospects of economic recovery, boosting demand for safe-haven assets. That said, there is still a broad demand for risk sentiment so the bullish push in silver may be short-lived.

The greatest risks to markets right now are the strong surge in virus cases in places like India and the possible shift in Central Bank monetary policy. Despite vaccination rates increasing at a promising level in many developed countries, there is still a shortage of doses in many emerging countries where infection rates are still out of control, posing a risk to broader economic recovery.

Silver, Bars, 5000 Grams, Real Value

Image Source: Pixabay

In the meantime, Central Banks are starting to show some divergence in their monetary policy views with the Bank of Canada saying yesterday that they may start tapering their current policies, with a rate hike being brought forward to 2022. And whilst the Fed continues to deny any policy changes until 2024, there will be big expectations at next week’s meeting to see if any new emphasis is given on a change of policy sooner than expected.

But the focus today will be on the ECB. Despite not expecting any policy changes, we have seen some members of the monetary policy committee diverge slightly from the widespread dovish stance. Council members Klaas Knot and Robert Holzmann have both called for bond-buying to be tapered later this year, suggesting a split at the ECB and a reason for investors to be extra vigilant at the post-meeting press conference held at 13.30 BST.

XAG/USD Key Levels:

These risks to the broader market could be supportive for silver in the medium-term. The daily chart is showing the importance of Fibonacci levels in its price behavior over the last few months, so I would expect the 2664 – 2673 (61.8% Fibonacci retracement from 2987 to 2165) to offer increase resistance in the next few sessions. This area was also responsible for halting the attempted recovery back in March.

1 2
View single page >> |

Disclaimer: DailyFX, the free news and research website from IG, is one of the world's leading sources for news and analysis on the ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.