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Silver rises amid a softer dollar, eyes turn to $ 27.00

  • XAG / USD prices are slightly higher amid a weaker US dollar.
  • The precious metal seeks a breakout above a pennant structure in the medium term.

Silver Spot Prices (XAG / USD) they have been trading at the forefront on Wednesday, in line with the broad strength seen in precious metals as the US dollar comes under pressure. Currently, the XAG / USD is trading with gains of around 0.3% or 5 cents at $ 26.30.

Monthly, quarterly, and year-end flows appear to be the main factor driving the latest downward movement in the USD compared to anything related to risk appetite (in fact, while US stock futures are a slightly higher, European equities and crude oil markets are lower). The dollar index fell to fresh yearly lows Wednesday morning, hitting its lowest levels in more than two years at 89.50. Many dollar bears will target the 2018 lows around 88.25.

Factors driving markets right now …

Looking at the main fundamental factors driving the markets on Wednesday; the UK and the EU signed their trade deal and the EU and China signed their investment deal, both as expected.

As for the latest Covid-19 developments; The situation is looking increasingly unpleasant on both sides of the Atlantic with the daily death toll in the United States rising to a record 3,725, while the daily death toll in Germany rose above 1,000 for the first time. Meanwhile, the UK government is scheduled to announce stricter lockdown measures in the UK afternoon, as cases continue to rise and France is reportedly considering a 6pm curfew.

While the situation appears to be worsening in the new year faster than investors expected a few weeks ago, the market for now remains firm (as seen in the weakening of the USD) given the launch of mass vaccination programs; The UK has just approved the Oxford University / AstraZeneca vaccine and has ordered 100 million strands (enough to vaccinate 50 million people), which will accelerate its vaccination efforts in the coming weeks, while the EU will also has started distributing the Pfizer vaccine and is likely to approve Moderna’s vaccine in January.

If the market value begins to falter in the new year, precious metals could be affected by any significant strengthening of the US dollar.

XAG / USD Continues Consolidation Within Pennant

XAG / USD prices continue to consolidate within a pennant structure over the medium term; To the upside, price action is capped by a downtrend linking the highs on December 21, 28, and 30 and is supported by an uptrend linking the lows on December 14, 23, and 24. A breakout above this pennant (which would likely be signaled by a move back towards $ 26.50 would open the door for a test of weekly highs around $ 26.77 and then to the psychological level of $ 27.00 and perhaps last Monday’s highs at 27.40 $. A break to the downside (signaled by a move below the support at $ 26.00) would likely open the door for a move back towards $ 25.00, which coincides quite well with the lows of last Monday and Tuesday and sits just above above the 21-day moving average at $ 24.90.

4 hour chart

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