Silver price (XAGUSD) rally seems unstoppable. The metal is trading at $24.07, which is the highest it has been since August 2013. It is also in the fourth straight months of gains. Other metals like copper and gold are also surging, with the latter being at the highest level on record. As a result, miners are the best-performing assets in the FTSE 100 index today.
Investors pile into silver
Silver price has been rallying in the past few months for several reasons. First, investors have moved to the metal because of the perceived uptick in demand as the world economy recovers. This was evidenced earlier today by the upbeat in China’s industrial profits and last week’s PMIs.
Second, this demand is increasing at a time when the global supply is easing as companies close their mines.
Third, silver price has jumped mostly because of the rising gold price. Like I wrote earlier today, gold price reached its all-time high because of the low yields in the US. Therefore, as gold price rises, more traders turn to silver for better returns. On Friday, Ed Moy, a strategist told Fox Business:
“When gold goes up $10, yes you can make good money on it. When silver goes up $10, you can make a lot of money.”
So, is this silver price rally set to continue? Let us look at the metal’s technical outlook.
Silver price technical outlook
The chart below shows the performance of silver price since 1998. On the chart, we see that the price is above the short and long-term moving averages. Also, the RSI has moved to the highest level since August 2011, which is a sign that the metal is getting overbought. But it is still not yet extremely overbought meaning that there could be more room to run.
Interestingly, the price is heading towards the 50% Fibonacci retracement level. This retracement connects the lowest level in 2001 with the highest level in April 2011. Therefore, the price is likely to continue rallying as bulls target the next resistance level at $26.73. This is the 50% retracement level.
Still, a move below $20 will invalidate the upward trend. This is an important price because of its psychological significance.
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Silver price forecast
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