Silver prices (XAG/USD) are trading higher this Tuesday, following the market’s risk-on sentiment as a new US administration is set to take off tomorrow. Driving sentiment on the day is the upbeat mood of the market, which is driving risky commodity demand. This is also producing a softer US Dollar, which has helped prop up silver prices.
The primary market focus is the testimony of incoming US Treasury Secretary and former Fed Chair Janet Yellen to the Senate Finance Committee.
The markets are already expecting that Yellen would lead a pursuit towards massive fiscal stimulus, which would be in tandem with the fiscal stimulus package already reeled out by incoming US President Joe Biden.
Silver prices continue to be a function of the performance of the US Dollar in the short term, but more policy pronouncements by the incoming US government could also play a role in the pricing of commodity assets.
Technical Outlook for Silver Prices
Silver prices have been propped up by the risk-on mood of the market, especially as USD flows hit the market after the US holiday. The bounce in silver prices means that the expected measured move following the breakdown of the bearish pennant is yet to be realized.
On one hand, bulls need to see a break of the 25.386 resistance and an extension of the breakout move beyond 26.325, thus invalidating the bearish pennant. This move will also take out 26.034 and provide a pathway for targeting 27.502.
On the flip side, a rejection at the current resistance may be viewed as a completion of the pullback move, following the breakdown of the bearish pennant. This provides the impetus for seller to resume the pattern’s evolution towards the 22.549 price projection. This move also takes out 24.569 and 23.164 in the process.
Silver Price (XAGUSD); Daily Chart