Silver price is up by more than 1.50% today as traders wait for the upcoming election in the United States. The metal is trading at $23.95, which is slightly above last Friday’s low of $23.75. Gold and copper are in the green also.
There are three main reasons why silver price is rising today. First, the metal is reacting to the latest polls that show Biden with a comfortable lead ahead of the US election. He has a nationwide lead of about 10 points.
Also, he is leading in key battleground states. Investors believe that Biden will be net positive for silver prices because of his plan to spend more than $2 trillion in tackling climate change. That will include huge investments in solar energy, which is a major consumer of silver.
Second, there are also risks that this election will be contested because of the number of Americans who have already voted using mail. According to the media, these Americans have increased to more than 90 million.
Therefore, there is a likelihood that the loser of the election could contest it, pushing the economy to a constitutional crisis. As a result, most risk assets, including gold and the US dollar are rising today. In a statement, an analyst at RBC Capital Markets said:
“The possibility of post-election turmoil and a contested outcome represents a significant risk in our view, and one that could prove quite gold-positive in the most extreme scenarios.”
Third, silver price is also reacting to the relatively strong economic numbers from China and Europe. Earlier today, data from China showed that the manufacturing sector did well in October. Subsequent numbers from the UK, the Eurozone, and countries like Norway have been strong as shown below. These numbers imply that demand for the metal is rising.
Major PMIs rise
Silver price technical outlook
On the daily chart, we see that silver price is trading at $23.95, which is above the ascending green trendline that connects the lowest levels in May, June, July, and September. We also see that the metal had made a false breakout on Thursday last week. It is also between the 23.6% and 38.2% Fibonacci retracement level. (This retracement connects the lowest and highest levels this year).
Therefore, I suspect that the metal will continue rising as bulls attempt to move above $25. At the same time, a move below the green trendline followed by last week’s low of $23.75 will invalidate this trend. It will open doors for the metal to retest the next support at $20.
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Silver technical chart
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