Silver hovers around the $ 25.00 level as attention turns to Yellen’s testimony

• Spot silver is up Tuesday, with the metal supporting around the $ 25.00 level.
• Stock is back in the US after Monday’s Martin Luther King Day holiday and the market mood is bullish.
• Yellen’s testimony before Congress will be the main focus of immediate market attention.

The spot prices of the Silver (XAG / USD) is moving higher on Tuesday, with the white metal crossing again and staying above the $ 25.00 level. per troy ounce. Currently, the precious metal is trading with gains of around 0.5% or just over 10 cents, mainly supported by the weakness of the US dollar (the DXY dollar index has fallen below 90.50 again from highs near 91.00 of Monday).

US stocks are back after the US market holiday due to the Martin Luther King holiday on Monday and the mood of the markets has become a bit more optimistic. US equities just opened positively, US bond yields are higher, crude oil and industrial metals markets are (for the most part) bullish and in safe haven currencies, USD and JPY they sure are regressing.

No topic or news can be pinpointed, in particular, on why markets are in a slightly more optimistic mood on Tuesday. Apparently the main driver has been a technical correction of the risk aversion monetary flows on Monday with markets actually much more in a “wait and see” mode before the key risk events to come.

Speaking of key risk events, the main focus on investors’ minds this Tuesday will be the testimony of the next US Secretary of the Treasury, Janet Yellen, before the Senate Finance Committee in Congress. Most of the key parts of his testimony have already been leaked to the media.

On the fiscal stimulus, it is expected that ask the United States government to “go big” in terms of fiscal stimulus given the low interest rate environment. In the past, Yellen has advocated for the United States to seek a balanced budget, but is not expected to do so on Tuesday.

Regarding the US dollar, Yellen is expected to clarify that the US adopt a “hands-off” approach to exchange rates, which could also be accompanied by a thinly veiled warning to US trading partners that they should do the same (rather than actively seeking to weaken their currency to boost exports).

After Yellen speaks, the trade should calm down for the rest of the session. Depending on how the US dollar reacts, the precious metals markets are likely to act on this. As always, investors should also be on the lookout for any reaction in real returns and inflation expectations. Any drop in the first and a rise in the second could provide a boost for silver and gold.

Silver technical levels