- Silver spot prices have seen a significant rise on Wednesday, gaining 2.5%.
- Hopes of a new reflation as Biden takes office have boosted precious metals and other risk-sensitive assets.
The spot prices of the silver (XAG / USD) have seen a significant rise on Wednesday, up 2.5% or more than 60 cents to get closer to last week’s highs of $ 25.89 as markets bet on inflation-inducing stimuli. This marked a sharp change from the fall prior to the opening of the American session that saw prices fall almost to the $ 25.00 level.
The president of the United States, Joe Biden, has taken the oath without too many surprisesBut markets have maintained a strong appetite for risk throughout, continuing the move that began before former Fed Chair and Treasury Secretary Janet Yellen’s testimony before Congress on Tuesday. . US equities rose to record highs, risk-sensitive currencies are mostly bullish and commodities (energy, precious and industrial metals) are also up.
Reflation Hopes Boost Silver Prices
Former Fed Chair and candidate for US Treasury Secretary Janet Yellen testified before the Senate Finance Committee on Tuesday and her rhetoric / tone on the Urgent need for drastic action on more stimulus spending seems to instill optimism in the market about the prospects for the US recovery and the impact this will have on inflation. Inflation expectations recovered on Wednesday. Since precious metals like silver are considered a hedge against future inflation, this is positive for silver bulls..
Furthermore, markets suggest that there is growing confidence that the Fed will be there to 1) keep interest rates low and ultra-accommodative and 2) absorb most of the new government debt issues from the US through its Asset Purchase Program. In the wake of the recent “tapering fear” (when markets suddenly became fearful that the Fed might start to downsize its QE program soon and thus nominal and real returns rose), real returns they have moved lower again. Lower real returns make non-performing precious metals more attractive to become an alternative asset, helping silver bulls.
Silver technical levels
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