Silver on Its Bullish Direction
On Monday, silver futures finished the session at a two-year high. After all, with the fading hopes of a rate hike, it isn’t difficult to find an upsurge for the precious metal.
Silver for September contract in Chicago rallied 15 cents to close at $20.50 an ounce, the strongest level last seen July 2014.
HSBC chief precious metals analyst James Steel noted that silver could be supported by gold, an Accommodative Monetary Policy by the US central bank and negative interest rates, and intensified, growing geopolitical risks.
With that said, however, the bullish trend’s force may not be as strong as it has been so far this 2016.
“Investment demand, which has been strong this year, may cool but should remain positive,” the analyst assures, nonetheless.
According to Steel, the precious white metal will touch the $16-$21.50 per ounce range towards the end of the year.
Fed, Waning Rate Hike
Gold and silver have been buoyed by the declining bets of a rate increase by the Federal Reserve for this year.
Lower interest rates result to a weaker dollar, which in turn, boosts dollar-branded commodities. This makes them less costly for buyers using other currencies.
At the moment, the market sees a one-in-three chance of rate increase by year end. However, to further boost the confidence of this prospect, additional solid data are required.
Until then, the situation at hand will continue to push precious metals in an upward direction.
The US dollar index, which measures the greenback’s strength against a basket of six other major currencies, slid 0.39% to trade at 95.38, tacking close to its five-week low of 95.34 hit late last week.
Meanwhile, investors are looking ahead to key US data later in the day to assess the health of the US economy. It is possible for a rate hike to happen later in the year if the aforesaid data will be strong and solid.
Silver on Cracking Resistance
Going back to silver, technical analysts have commented on silver’s repeated failure to crack resistance at level $20.52. The bulls have had at least three cracks at this through the July, failing each time.
But with the current price fixed at $20.48, a crack in resistance is most likely coming soon.
Elsewhere on the Comex, gold climbed 0.70% at 1,368.95 as of 12:41 GMT, buoyed by a weaker dollar caused by the aforementioned declining rate hike hopes. Prices of the yellow metal have jumped above its three-week peak of $1,362.00 hit last Friday
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