Silver price (XAGUSD) impressive rally is just starting, according to analysts from Saxo Bank and Commerzbank. This is despite the fact that the price has declined by more than 1.3% today. Unlike silver, gold price is up by more than 0.60% today.
Joe Biden and silver prices
Some analysts believe that the current silver price rally is because of Joe Biden, the front liner in the ongoing American campaign season. Recent polls show that the Democratic candidate has a better chance of winning the election than Donald Trump. He holds a sizeable lead in some key states like Texas and Florida.
Why is Joe Biden good for silver prices? The answer is his recently-unveiled trillion-dollar climate plan. Analysts believe that this plan will include sizeable investments in solar and other renewable energy sources. And silver is an important metal in the manufacture of some solar panels. Therefore, the analysts expect that demand for silver will continue rising.
Similarly, a substantial amount of money passed in the EU recovery fundwill go towards fighting climate change. The EU recovery fund, the emerging Chinese economy, and Joe Biden could be some reasons why silver price is rising.
Buy the dips
According to Carsten Fritsch, the near term trend for silver price will continue being up. He advised his clients to buy the dips. He said:
“In the very short-term term the direction is still upwards. You see that prices continue to march higher. There might be some setbacks, but these are just brief and short-lived and are being used as a buying opportunity.”
The same sentiment was echoed by Ole Hansen, a commodity strategist at Saxo Bank. He said that silver price will continue tracking gold. He said:
“The closer gold gets to its record high the stronger the magnetic field will become and that could see it challenge that level before long.”
In an opinion, Clara Ferreira added that silver price could receive a boost as supply eases. She wrote:
“Output has been trending lower in recent years, with large primary-silver mines aging and new ones holding less of what is one of the world’s rarest metals.”
Silver price forecast
The daily chart shows that silver price has been in a strong rally. It is now trading at $22.65, which is slightly below this week’s high of $23.22. The price is above the short and medium-term moving averages while the RSI has moved above the overbought level of 70.
Today, this RSI is moving lower slightly. Therefore, in the near term, silver price is likely to drop slightly before continuing the rally. Nonetheless, a move below $20 could send a signal that bears have prevailed.