The silver price has been consolidating after its recent blistering run higher and the precious metal looks primed to break out from the recent pattern. Silver was pummeled with the rest of the commodity market in the mid-March market panic.
After touching a low of $11.63 on the 18th March, silver has since rallied to touch highs just shy of $30.00 as the market finally caught up to the rally in gold.
I wrote yesterday that the price of gold could come under pressure with the Federal Reserve meeting at Jackson Hole this week. Silver has benefitted from the plunge in the price of dollar as traders reacted to a variety of negative drivers for the greenback.
With a second stimulus package being discussed for the United States, analysts were starting to question the runaway budget spending of U.S. politicians. Alongside this, there is another election due in early-November between two candidates who have vastly different outlooks for the country. On the central banking side, we had the Federal Reserve ramping up the size of their balance sheet and threatening further aggressive action, such as yield curve control.
With all of the risks surrounding the U.S., investors were happy to sell the currency and repatriate some of their dollar exposure. Although the greenback got some respite from the FOMC minutes last week, the trend is still downward and may continue until we see further clarity over the next few months, including the result of the election. The near-term risk to the silver rally is if officials at the Jackson Hole event seek to talk down the price of precious metals and coll inflation expectations.
Silver Price Technical Outlook
The price of silver is consolidating nicely within a triangle, where the support lin runs from the key breakout of the $20.00 level around the 17th-21st July. The metal has found buyers at the $26.00 level and is looking for a break out to test the $28.00 level again. If we do see a further dollar rally this week, a break lower through $26.00 will target the $24.00 support.
Silver Price Daily Chart