Silver price (XAGUSD) wobbled today as investors refocus on the Fed meeting that will start today and the relatively stronger US dollar. The metal is trading at $23.78, which is below yesterday’s high of $26.20. It is not alone. Other metals are also in the red, with palladium, platinum, aluminium, and gold prices falling by 1.16%, 2%, 0.10%, and 0.35%, respectively. What is moving the price of silver today?
Analysts believe that silver price is falling because of profit taking. After rising by more than 100% in the past three months, analysts believe that some traders are cashing out their returns. The bigger decline than gold is mostly silver tends to be more volatile than gold. In a statement to Bloomberg, Brian Lan, the managing director of GoldSilver said:
“You see the strength wasn’t there. They were trying to try a few more times and a correction is due. So probably you might see some profit-taking already.”
Still, there are several reasons to believe that the current rally will continue. For one, geopolitical risks are rising, reduced supplies, real yields are at historic low, and governments have unleashed unprecedented stimulus packages. Just yesterday, Mitch McConnel, the leader of US senate unveiled a $1 trillion stimulus package that will see the government send $1,200 checks again. In a statement, Wayne Gordon, an analyst at UBS said:
“Debasement of the U.S. dollar, the more negative real rates, and you’ve still got lingering uncertainties around geopolitics and the U.S.-China relationship. That combination of things is what’s pushing gold (and silver) harder.”
Meanwhile, silver price has eased momentum because the US dollaris relatively stronger today. The dollar index, which measures the strength of the currency against peer currencies, has risen by about 0.15%.
The strength of the US dollar could recoil as the Fed starts its meeting today. Analysts believe that the bank will leave interest rates unchanged and possibly announce more measures to boost the economy. In a statement, Nicholas Frappell, a Sydney-based analyst said that these measures will probably be supportive for silver price.
Silver price (XAGUSD) technical forecast
The daily chart shows that silver price unstoppable rally has taken a breather today. Still, it remains above the 50-day and 100-day exponential moving averages while the RSI is still in the overbought zone. Still, even with the pause today, the chart shows that the price is still in a bullish trend. Therefore, the price is likely to continue rising as bulls target the $26.73 resistance level that I wrote about yesterday.
Still, a break below $20 will invalidate the bullish trend. This price is an important psychological support level.