Date: 28 Aug 2019
Silver prices continued to advance above the $18.00 resistance level on Tuesday, following the early-week technical breakout above the important $17.50 level. Silver has been enjoying increasing demand alongside gold, as traders seek-out safe-haven asset classes that have the potential to maintain wealth and outperform interest rates and bond yields.
Sino-U.S trade tensions have helped silver prices rise to levels not seen since April 2017, while the worsening economic and political situation in Hong Kong has also helped to boost the value of precious metals. In percentage terms, the value of silver has now risen a stunning fifteen percent since the start of 2019.
The historical factors that affect the price of silver are numerous, including mining, supply and demand issues, and investor speculation. Silver traditionally receives its strongest price rise during times of war and conflict, as nations will require substantial amounts of weapons that involve silver.
Looking at the medium-term technicals for silver, the recent move above the $17.50 level could be a game-changer in terms of forming a sustainable uptrend, especially given that technical resistance is now fairly light until the $19.60 level.
A worsening of trade tensions between the United States and China certainly appears to be supportive of silver prices, while rising geopolitical tension between Pakistan and India are also underpinning the bid in silver and gold prices. As silver starts to outpace gold this week, traders will be closely monitoring the gold-silver ratio, which represents the number of ounces of silver it takes to buy a single ounce of gold.
Silver Daily Candlestick Chart | Source: ActivTrader
Key upcoming technical support for silver is currently found at the $17.50 and $16.78 levels, while extended support is found at the $16.50 level. To the upside, near-term technical resistance is located at the $18.50 and $19.00 levels, with extended resistance found at the $19.60 level.
Written by Nathan Batchelor, External Analyst, ActivTrades
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