Silver price (XAGUSD) started the quarter with a bang. The price rose to an intraday high of $18.43, which is the highest level since February this year. Gold, too, started the quarter in a positive note as its price reached its highest level in eight months.
Silver price rises as Anthony Fauci warns on coronavirus
The XAGUSD pair rose sharply after Anthony Fauci, the respected physician, warned that the US would start seeing more than 100,000 daily infections. This is a significant issue considering it would take just ten days for the total number of cases to rise by more than 1 million. Just yesterday, the US confirmed more than 44,000 new infections, which was the second-highest number since the numbers started to come out.
There are two sides to silver prices when it comes to coronavirus cases. On the one hand, silver tends to track gold, which means that more cases would be positive for it. That is because more cases would lead to more stimulus, which is usually a positive thing for gold. Gold enthusiasts see it as being a good hedge against currency debasement. Also, more cases would help to reduce silver supply, which is a positive thing for silver prices. In a statement, an analyst at Commerzbank said:
“Uncertainty about the coronavirus, particularly in the U.S, which could put the brakes on an economic recovery, and the ultra-loose monetary policy of central banks are giving support to gold.”
On the other hand, more coronavirus infections would affect demand for the metal. That is because, unlike gold, silver is an industrial metal that is used in the manufacture of several items.
Silver price technical analysis
On the daily chart, silver price is trading at $18.17, which is slightly below the days high of $18.43. The price is still above the 50-day and 100-day exponential moving averages.
Most importantly, the XAGUSD price is above the ascending trendline, which joins the lowest points in May and June. Therefore, silver price is likely to continue rising as bulls attempt to hit the next resistance level of $19.
On the flip side, a move below the trendline at around $17.50 will invalidate this prediction. This price is at the intersection of the ascending line and the highest point in May. It is also an important psychological level.