Silver price erased earlier gains as traders continued to worry about the rising coronavirus cases and the weaker US dollar. The XAGUSD pair is trading at 17.7000, which is below the day’s high of 17.97. Gold price also declined, with the XAUUSD pair trading at 1,767. The dollar index, on the other hand, has fallen by 0.30%.
Silver price had a great quarter
While silver price is falling today, it had a great quarter. The price has jumped by more than 24% in the past three months, which is a better performance than gold, which has only gained by about 10%. The rally has happened as investors attempt to own the metal as a proxy of its bigger cousin.
Gold is always more expensive than silver, which means that most traders invest in it instead of the more expensive gold. In addition, most analysts believe that silver is undervalued than gold. As you recall, it tested the lowest level in more than a decade in February this year.
Another reason why the metal had a better quarter is that business activity has started to rebound. In March and April, business activity around the world was almost zero. This is negative for the price of silver because of its industrial characteristics. Now, most people have moved to the metal because busines activity has been rising. This is evidenced by the recent US nonfarm payroll data and global PMIs.
Additionally, the overall financial market has been positive in the last part of the quarter. For example, the Dow Jones has bounced by more than 16% while other global stocks have risen by more than 30%. Crude oil has also rallied after turning negative in April.
Silver Q3 outlook
Looking ahead, silver is expected to continue rallying in the third quarter but the trend will not be in a straight line. Business activity is expected to rebound in most countries while risks are expected to rise. Some of these risks are the tensions between the US and China, US and Europe, and South Korea and North Korea. In some cases, these risks are usually positive for the metal. Also, the metal will react to possible stimulus from the US and Europe.
In a recent report, analysts at Goldman Sachs said that they expect silver price to end the year at $19.
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Silver price technical analysis
Silver price is trading at $17.768, which is slightly below $18.368, the highest point in June. The price is also above the 50-day and 100-day exponential moving averages. Also, the price has been consolidating as shown below. This means that the levels to watch will be the upper limit at $18.368 and the lowest levels at $16.96. A move above the upper limit will see the price continue rising as the bulls target the important target at $19. Also, a move below the lower level of $16.96 will see it continue falling.
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