XAG/USD: Correction After Updating The High
Silver prices are correcting after last year’s high renewal. The nearest support was at 26.50, near which there was a demand for the asset from investors.
Analysts at the Silver Institute point to the possibility of growth in the demand for the metal after the stabilization of the macroeconomic situation. Thanks to investment in industrial and physical silver, global demand is expected to reach an eight-year high of 1.025B ounces this year. Physical investments, including the purchase of silver bars, are expected to hit a six-year high of 257M ounces as traders continue to add silver to their investment portfolios. Thus, the growing demand and economic recovery after the pandemic will have a positive impact on the asset.
Unlike gold, silver is less correlated with USD and to changes in US interest rates. Growing inflation may support silver, but if it remains within the limits set by the Fed, it will not affect the metal’s rate in any way.
Support And Resistance
Last week, the pair hit the 2020 high and tested 30.00. After that, sharp correction began, within which the support level of 26.50 was reached. This week the asset is trading above this level. The RSI is in the neutral zone, which allows considering new purchases along the trend.
The margin zones from the futures market do not indicate a specific direction for trading at the moment, which is affected by the calm in the markets due to the New Year holidays in China.
Resistance Levels: 28.25, 29.15, 30.00.
Support Levels: 26.50, 25.00.
Long positions can be opened from 26.50 with the target at 28.25 and stop-loss at 25.80. Implementation period: 5-7 days.
Short positions may be opened below 25.00 with target at 22.75 and stop-loss at 25.90.