Silver price (XAGUSD) is in the green today, a day after it dropped by more than 2%. The metal is trading at $21.18, which is slightly higher than yesterday’s low of $26.25. Other metals, too, are in the red, with gold price down by more than 1% while copper is down by more than 1.20%.
Silver price is falling mostly because of the stronger US dollar. The dollar index has gained by about 0.10%, continuing the momentum that started yesterday. This rally is mostly because of the minutes that were released by the Federal Reserve yesterday. In these minutes, the bank warned that the ongoing slowdown of the US economy will last for longer if the country fails to adequately address the coronavirus pandemic.
At the same time, the bank ruled out against yield curve control, a program that is being implemented in Australia and Japan. Also, it asked congress to implement a new stimulus package while warning of the ballooning public debt.
Silver price tends to rise when the dollar weakens and vice versa. That is partly because the metal is mostly priced in US dollars and because of its close relationship with gold.
Silver price technical outlook
The weekly chart shows that silver price has been in a strong upward trend in the past few weeks. It has dropped in just two weeks in the past 17 weeks. Also, the price has successfully cruised above the important resistance level of $21.45. It remains above the 50-week and 100-week exponential moving averages.
Its volatility, as measured by the Average True Range (ATR) has also risen to the highest level since 2012. Therefore, I suspect that the price has been volatile because it moved close to the important resistance level of $30. As such, silver price is likely to continue rallying as bulls attempt to move above $30. On the flip side, a move below the support at $21.15 will invalidate this prediction.