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  • Silver prices have dropped back into the red and below $24.00 as USD recovered from earlier lows.
  • The precious metal continues to trade well within recent intra-day ranges and close to its 21DMA.

Spot silver (XAG/USD) prices have slipped back beneath the $24.00 level following a brief trip as high as $24.24, the precious metal having failed to hold above its 50-day moving average which sits at $24.15. A broad recovery from fresh annual lows in the US dollar that saw the Dollar Index rebound into the 90.70s from lows in the 90.40s has capped precious metal gains and, at present, spot silver trades around 8 cents or 0.3% lower on the day.

Bad Covid-19 news comes to USD’s aid

USD was in dire need of some help as it began carving out fresh year-to-date lows during Monday’s European morning session and that help appears to have come in the form of a string of not so great updates on the Covid-19 front from Europe and the US;

Starting with Europe; Germany and the Netherlands are going back into national lockdowns until January and, in the UK, London is about to move into the highest Covid-19 restriction tier. More concerningly, the UK Health Minister announced that a new strain of Covid-19, which has already been detected in 1000 people in London, is on the loose and is, reportedly, more virulent. However, the UK Health Minister did caveat that whilst this is bad news, there is no evidence to suggest that the currently being rolled out vaccines won’t work against this new strain.

Turning to the US; as Covid-19 infections continue to hit fresh all-time highs in the country, NYC Mayor Bill de Blasio is already talking about putting the city back into another full-scale lockdown. More recently, the Boston Globe reported that the city is to close gyms, museums, and other businesses in order to curb the Covid-19 surge.

Profit-taking and position-adjustment as the end of the calendar year approaches and ahead of what could turn out to be quite an interesting FOMC rate decision on Wednesday may also have been at play regarding USD’s recovery from lows and back to flat on the day. Either way, precious metals seem to have largely traded as a function of USD on Monday.

Silver drops back to 21DMA

Spot silver’s 21-day moving average (DMA), which currently sits at $23.90 has been like a magnet to the price action over the past few days, with the 50DMA at $24.15 acting as solid resistance. Silver continues to trades well within recent ranges; to the upside, there is decent resistance in the $24.30s-$24.40s area, while to the downside, the bottom of the recent range comes into play just before the $23.50 level.

XAG/USD one hour chart