Silver Video 27.07.20.
Weak U.S. Dollar And Strong Gold Provide Support To Silver
Silver continued its upside move and rallied above $24.00 as gold managed to get to all-time highs while the U.S. dollar lost ground against a broad basket of currencies.
The main news of the day is the new record for gold, which traded as high as $1945 per ounce on a spot basis. The U.S. Republicans and Democrats are set to negotiate a new round of economic stimulus which is expected to be valued at $1 trillion.
The rampant money-printing continues to provide support to the whole precious metal segment so gold’s rally is not surprising. Meanwhile, the upside in gold helps other precious metals as it attracts new investors into the segment.
In addition, gold/silver ratio managed to settle below the 80 level, helping silver gain more ground. Just a month ago, gold/silver ratio has been close to the 100 level, and the major downside move of gold/silver ratio was a major contributor to the recent silver price upside.
The U.S. dollar weakness is also a significant positive catalyst for silver. The U.S. Dollar Index has declined below the 94 level as dollar lost its safe haven attributes amid deterioration of U.S. – China relations and problems on the coronavirus front in the U.S.
Silver managed to settle above the resistance at $23.25 and gained significant upside momentum which allowed it to get as high as $24.60.
Not surprisingly, RSI is in the extremely overbought territory, but silver is supported by multiple positive catalysts which made this rally possible.
Old resistance levels have little relevance in this situation so traders have to watch silver’s dynamics closely and adapt to the current situation.
At this point, the recent high at $24.60 will serve as the first resistance level for silver. In case silver manages to get above this resistance level, it will head towards the $25.00 level.
On the support side, the nearest support is located at the previous resistance at $23.25. A move below this level will open the way to the next support level at $22.25.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire