XAGUSD: This Silver Price Rally is Just Getting Started – HSBC

silver price
silver price

Silver price (XAGUSD) continued to rally during the American and Asian sessions. As at 06:00 AM, silver is trading at $22.56, which is its highest level since September 2013. The rally means that the price has jumped by more than 100% in the past three months alone. Gold price and other metals rallied too. Gold is trading at $1,860, which is $40 below the important resistance of $2,000.

Analysts are bullish on silver prices

Earlier this week, we wrote that analysts at Citi had upgraded their silver price target to $25 per ounce. And yesterday, we pointed to an analysis by Goldman Sachs and Morgan Stanley, who wrote that the metal will continue rallying.

Turns out, more analysts are increasingly bullish about silver. For example, Vivek Dhar, a leading analyst at Commonwealth Bank, said that silver’s allure was its safe haven demand and lower yields of US treasuries. He said:

“Like gold, silver has benefited this year from safe haven demand and falling long term U.S. real yields. A sustained rally in silver can continue, particularly when demand hopes and supply concerns are added to the mix.”

He is not alone. In a note, James Steel, a precious metal trader at HSBC said that silver price is rallying because of the recent trends in gold prices. With an ounce of gold selling at $1,860, he argued that many traders are preferring to buy silver, which is cheaper. He said:

“Some investors who may not have participated fully in the gold rally could find silver attractive. We believe this is happening and may sustain silver at higher prices still.”

And in a note, analysts at Commerzbank said, “Silver has been more popular than gold among investors for months now.”

In another note, analysts at Sprott said:

“Silver was long due for a catch-up with gold. As a much smaller market, once investor interest enters in size, its supply side gets swamped.”

Some analysts believe that silver price will continue being support silver prices. A common theme being cited by analysts is the new stimulus packages and the focus on green energy. For example, most of the 750 billion euro funds passed by Europe will go to climate related investments.

Similarly, in the United States, polls show that Joe Biden is likely to defeat Donald Trump, which means that climate issues will be top priority. Silver is used in the manufacture of many green products.

Silver price forecast

On the monthly chart below, we see that silver price is slightly above the 61.8% Fibonacci retracement level. It is also above the 50-period and 100-period moving averages.

Also, we see that the price has been rallying in the past four consecutive months. Therefore, it seems like bulls are in control, which means that the price is likely to continue rallying. Any pullback could be a good buying location.

On the flip side, a move below $20.00 will invalidate the long-term trend. This is an important psychological trend.

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Silver price forecast

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