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Silver has pushed higher since finding some support at $16 at the end of last year, breaking above its 20 DMA, which reflects stronger sentiment. We have therefore turned bullish over the very short term (around one month). Still, we may be too early considering the weakness of the trend for now.
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On the upside, The Bullion Desk see next key resistance at $17. On the downside, a firm break below the 20 DMA could prompt renewed downward pressure toward the psychological level of $16 and then $15.
Silver is a little firmer since the start of the week after enjoying a decent rally of roughly 3.5% last week amid a broad-based appreciation across the precious metals, particularly the PGMs.
The macro environment for precious metals has become slightly more favourable since the start of the year – the dollar has started to consolidate after a significant rally in November and December while US real rates have drifted lower. Against this backdrop, investor sentiment toward precious metals has improved.
In the fundamentals, global industrial demand for silver may surprise on the upside next year thanks to stronger dynamics in world industrial production, supported by fiscal stimulus measures. The OECD upgraded its global growth forecast for 2017 to 3.3%.
At the macro level, investors will focus to Fed chair Janet Yellen’s speech on Friday, which in turn may affect silver prices via a change in the dollar and US real rates.
Source: The Bullion Desk