Silver Video 08.07.20.
Silver Gains Upside Momentum
Silver managed to get above the resistance level near $18.50 as gold rallied to new highs while the U.S. dollar remained flat against a broad basket of currencies.
Finally, spot gold managed to get above the psychologically important $1800 level. The drivers behind gold price upside are well-known and include the worsening situation on the virus front as well as the never-ending stimulus from the world central banks.
Gold’s upside is a major bullish factor for all precious metals including silver as it attracts more investments into the segment. In my opinion, gold has good chances to continue the current upside move as authorities have no choice but to continue providing stimulus while the pandemic shows no signs of exhaustion.
The U.S. has just crossed the 3 million confirmed cases mark while states like California and Texas reported record daily increases in the number of coronavirus cases. In such environment, traders will continue to buy gold to protect themselves from the potential sell-off in the equity markets.
Interestingly, there’s no safe-haven buying in the U.S. dollar, and the U.S. Dollar Index is flat against a broad basket of currencies. Gold/silver ratio continues its decline and is located close to the 97 level. The continuation of the current trend in gold/silver ratio will provide additional support to silver.
Silver has settled above the resistance level near $18.50 and continues to gain upside momentum. At this point, silver has good chances to test the yearly highs at $19.00 in the near term.
This year, silver made two attempts to get above $19.00 but each attempt was followed by a material sell-off. This time, silver has better chances to get above this key resistance level as gold is rallying and the fundamental situation for the precious metal segment is more favorable.
On the support side, the nearest support level for silver is located at the 20 EMA at $17.90. A move below the 20 EMA will be a big disappointment for silver bulls as it will show that silver is losing momentum. In this case, silver will head towards the major support level at $17.50.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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