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  • Silver prices rallying on USD weakness and concerns over the global economy. 
  • US dollar shedding its coat and sinking below the 99 handle. 
  • Silver has run up an extension towards the 61.8% Fibo target. 

Precious metals are on the up with the US dollar slumping and corporate earnings pressuring US stocks lower. Weakness in the global economy is really starting to set in due to a shut down in business activity intended to stem the spread of COVID-19. 
We are seeing the price of silver climbing over 3% on Tuesday, travelling form a low of $15.29 and reaching a high of $15.82, extending its run from mid-March lows of $11.22. 

Demand for precious in play as global economy in trouble

The demand for precious metals is likely to continue so long as real rates are seen to be negative pertaining to the amount of stimulus there is the global economy with central banks anchored to the lower bound, if not negative in some nations. “Indeed, little concern about the inflationary impulse following a decade-long era in which inflation was largely irrelevant, the Fed is likely to remain at the zero-bound for longer than would be implied by the contagion’s impact alone,” analysts at TD Securities explained. 

“The Fed’s massive QE program and the fiscal impulse could see long-end rates rise during the recovery phase, but not without rising inflation expectations, which should keep real rates suppressed.”

Meanwhile, we are seeing some significant corporate earnings reports now which are reflecting the impact of the global shut down of business flows. One of the standouts is JPMorgan Chase & Co. reporting a 69% drop in net income. However, US benchmarks are resilient with all three in the green a the time of writing. Another major catalyst this week for the precious metals comes with the US dollar continue to slide, losing traction below the 99 handle and on the approach to the 98.80 and a high volume location around the 50% mean reversion point of the March rally. 

Silver levels

Silver has rallied in recent days and is on the verge of taking on a 61.8% Fibonacci target at 15.98. This could be a touch area of resistance and a pullback, on the back of a pop in the US dollar, for instance, could trigger to 15.50 which bulls will expect to hold for a re-run higher. 17.2- and a 78.6% Fib target will then be in play which has a confluence with prior suppory and resistance stracure.