Silver Price Analysis: XAG/USD moves another 2.83% higher and the Gold/Silver ratio breaks an important support

• Silver’s hot run continues as the precious metal prints above USD 27 per ounce.
• The gold/silver ratio is testing a major wave low at 75.44.

Silver 1-hour chart

Silver has had another bullish session on Wednesday, this now takes the year to date performance to a massive 48%. Holdings in silver-backed exchange-traded funds (ETF’s) had risen to a record 8,445 tonnes this year. This is almost double the previous record in set 2009. The precious metals complex has been on a great run of late and they normally perform when the market is expecting issue with inflation. This time round some market participants think that the Fed’s actions in dealing with the COVID-19 pandemic could increase inflation rates.

Looking at the chart below it seems XAG/USD has hit some resistance at USD 27 per troy ounce. If there is to be a price drop then the previous wave high at the red resistance line could be an area of support. USD 26.20 per ounce was a strong area of resistance in the past and this time round could help stem losses. If the level does break, there is another support zone at the blue level near USD 24.78 per ounce. 

Gold/Silver ratio weekly chart

The Gold/Silver ratio weekly chart shows a clear trend change. The black trendline has now been taken out and this is significant as it spans nine years. On the lower timeframes, the support level at 75.44 was also broken although the price has moved back above it now. If this trend continues there could be more potential in solver than there is in gold and the ratio is definitely one to keep an eye on.

Additional levels