- Silver prices have seen a further slide on Tuesday as markets continue to abandon safe havens in favor of risk.
- Vaccine optimism and strong US data are the two main factors influencing demand for precious metals.
- XAG / USD has for now held its head above $ 23.00.
At payment (XAG / USD) has lost more ground on Tuesday, with the precious metal briefly dipping below the psychological level of $ 23.00 in the previous trade before recovering again around $ 23.20. Still, silver is trading at a loss of more than 1.5% Tuesday, or nearly 40 cents.
Precious metals bet against more Fed stimulus
Precious metals took a beating this week, with silver prices falling nearly 4% and gold prices nearly 3.5%. The sell-off was initially triggered by positive new vaccine news from AstraZeneca ahead of Monday’s European opening. Better-than-expected vaccine news in November has given market participants more confidence that the global economy can enjoy a strong post-pandemic economic recovery in 2021, reducing demand for safe havens such as gold and silver. .
Additionally, precious metals markets took a further hit later during Monday’s European session with much stronger-than-expected US PMI Markit data for November, showing that vaccine optimism had more than offset. concerns about the return of the closes during the winter as a revealing of higher inflationary pressures throughout the economy.
Other evidence of the stronger-than-expected performance of the US economy came Tuesday in the form of much stronger-than-expected S & P / CaseShiller house price data, which sent prices up 6.6% year-on-year in September.
Analysts will argue that such robust data, combined with recent optimism about vaccines and the fact that US equity markets are at or near record highs, undermines the case for further stimulus from the Fed. in December. Most still expect the Fed to extend its QE purchases to longer-term maturities, but the argument for increasing the total size of monthly purchases to $ 80 billion has been clearly weakened by recent events.
With the above in mind, precious metals, which typically do well when central banks ease when market participants hedge against the risk of higher future levels of inflation, have not done well so far. the week, and the fall might not be over yet.
Silver in short-term downtrend channel, negative bias remains intact
Silver has been moving lower within a short-term downtrend channel (see the one-hour chart below) and continues to trade within the bounds of this channel, which means that the short-term bias of the precious metal remains on the downside.
Aside from the psychological level of $ 23.00 that has already shown solid support on Tuesday, the next level to watch is $ 22.60, the low of October 29.
On the upside, if XAG / USD can break through the top of its downtrend channel, resistance just above $ 23.60 (Nov 19 low) will be worth noting.
4 hour chart
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