Silver Video 13.07.20.
Silver Gains More Upside Momentum
Silver managed to get above the major resistance at yearly highs at $19.00 as the U.S. dollar continued to lose ground against a broad basket of currencies while gold/silver ratio declined below 95.
Gold continues its upside move despite the optimism in the equity markets as traders shop for protection against a potential market sell-off and bet that the unprecedented monetary stimulus from the world central banks will continue to push precious metals’ prices higher.
Meanwhile, gold/silver ratio dropped below 95 and moved towards the 94 level. Before the pandemic, gold/silver ratio was below 90. In my opinion, a return to pre-pandemic levels is a viable scenario which will provide additional support to silver.
The U.S. dollar shows weakness as traders prefer gold as a safe haven asset, and the U.S. Dollar Index has settled below 96.5. Weaker dollar is bullish for silver and other precious metals as it makes them cheaper for buyers who have other currencies.
In short, the setup remains very favorable for silver. Gold stays above $1800 per ounce and has good chances to continue its upside move. Meanwhile, gold/silver ratio is declining and looks ready to test pre-pandemic levels below 90. The weak U.S. dollar provides additional support to silver.
In my opinion, silver has better chances to settle above $19.00 and continue the upside trend compared to the previous attempt to gain upside momentum above this level that took place in the August of 2019.
Silver got above the key resistance at $19.00 and continues its upside move. The nearest resistance is $19.50, near the high of the previous attempt to settle above $19.00.
In case silver manages to settle above $19.50, it will gain additional upside momentum and head towards the next resistance at $20.00. I’d note that silver has not visited such levels since 2016.
On the support side, the previous resistance at $19.00 will likely serve as the first support level for silver because traders who have missed the initial move above this level will try to buy the pullback if it occurs.
If silver moves below $19.00, it will likely gain downside momentum and head towards the next support level at $18.50.
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This article was originally posted on FX Empire
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