Silver Price Daily Forecast – Silver Moves Towards Support At $26.20
Silver Video 25.08.20.
Higher U.S. Government Bond Yields Put Pressure On Silver And Gold
Silver is trading near $26.50 as it remains under pressure despite weaker U.S. dollar.
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U.S. and China have recently confirmed that the Phase 1 trade deal was progressing well, providing additional optimism to the world markets.
This optimism put pressure on precious metals which have benefited from safe-haven buying. Gold has settled below the 20 EMA at $1945 and continues to lose ground.
Meanwhile, gold/silver ratio has settled near the 72 level. As I noted before, gold/silver ratio remained near 72 for many trading sessions and its volatility has decreased. In case gold/silver ratio moves above 73, it may develop upside momentum and put some pressure on silver.
U.S. Dollar Index has returned to the 93 level after an unsuccessful attempt to settle above the 20 EMA at 93.45. Typically, weaker dollar is a bullish catalyst for silver as it makes it cheaper for buyers who have other currencies. Today, this positive catalyst is offset by the significant increase in U.S. government bond yields.
Rising U.S. government bond yields are bearish for precious metals that pay no interest. Higher yields on safe-haven instruments increase the opportunity cost of holding silver or gold as the investor who has precious metals in the portfolio misses the opportunity to harvest interest from safe bonds.
Technical Analysis
Silver continues to trend down closer to the nearest support level at $26.20. This support has already been tested several times and proved its strength. In case silver manages to get below $26.20, it will gain more downside momentum and head towards the 20 EMA at $25.90.
A move below the 20 EMA will present a serious problem for silver bulls as it will indicate that silver lost its current upside momentum. In this scenario, silver may quickly head to the next support level at $24.95.
On the upside, the technical picture has not changed in recent trading sessions. Silver needs to get above the nearest resistance level at $27.75 to gain more upside momentum and continue the current upside trend. If silver manages to get above $27.75, it will head towards the recent highs near $28.50.
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