Silver price (XAGUSD) is soaring today as traders remain optimistic about recovery of the global economy. The price is trading at $18.33, which is inches below last week’s high of $18.46. Other metals have joined the global rally in stocks also. Gold price has jumped to almost $1,800 while copper price has jumped by 0.67%.
Silver price is soaring because investors are optimistic about the recovery of the world economy. Economic data released today further built this case. For example, retail sales in the European Union rose at the fastest pace ever recorded.
In Hong Kong, economic data showed that manufacturing PMI skyrocketed in June. And in the UK, auto sales and construction PMI rose slightly in June. And last week, data from the United States showed that the economy added more than 4.8 million jobs.
As an industrial metal, silver price does well when the general economy performs well. That is simply because it leads to more demand for the metal. The same case can be made about copper price.
Low interest rates for longer
Another reason why silver price is rising today is the fact that investors are now pricing-in an extended period of low interest rates. They argue that the Fed will not be willing to raise rates any time this year because of the damage being caused by the virus.
Therefore, ultra-low interest rates at the time when global debt is rising means that asset prices will be inflated. Silver, stocks, and gold could be beneficiaries of this trend.
In a statement, analysts at Citi said that central banks are expected to buy assets worth more than $6 trillion this year.
Still, there are people who don’t see silver price moving above $20. In a recent piece, the FT said:
“In recent years, the physical trade in precious metals has attracted too many compliance costs and scandals to be interesting to most banks. Even first-rank hedge funds have difficulty getting ready access to the physical market for gold. Silver? They’ll call back later.”
Silver price technical forecast
Silver price has been in a bullish trend since March, when it settled at $11.64. On the daily chart, the price is now above the 50-day and 100-day exponential moving averages and above the 78.6% retracement level. The price is also above the ascending trend line that is shown in black.
Therefore, it seems like bulls are in total control, which means that the price will likely climb as bulls attempt to move above $18.50. On the other hand, a move below $17.50 will invalidate this trend. This price is at the intersection of the ascending trend line and the lowest point on June 26.