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Silver poised for a rally as scramble for dollars eases off, 61.8% Fibo in focus

  • Silvertaking a breather in the pursuit of Gold equilibrium of ratio.
  • USD liquidity improving, giving life to precious metals complex. 

The price of silver has been shifting gears to the upside in the latter part of the month as the US dollar liquidity frees-up, stalling for a potential pause and allowing the price of silver some catch-up time with its sister precious metal, gold. The Gold and silver ratio has dropped ver 12% over the same time period, -1.99% today at the time of writing having completed a 31.6% Fibo retracement of the COVID-19 rally. 

At the time of writing, silver futures are trading at $14.20, +0.52% having travelled from a low of $14.05 to a high of $14.50, consolidating in a 38.2% Fibonacci retracement as the scramble for dollars appears to have eased with the Fed's extraordinary measures helped to quench the market's thirst for dollars. Spot silver, in a similar fashion, has already completed a 38.2% retracement as well. 

Improvement in USD liquidity helps to remove some left tail risk

"For the precious metals complex, the improvement in USD liquidity helped to remove some left tail risk, but we note that the recovery in prices has been made possible by the consolidation in inflation expectations following the series of government and central bank interventions," analysts at TD Securities explained. 

"In the immediate term, gold prices appear to have run ahead of real rates, but looking forward, as the dust settles on covid's impact we expect gold to perform smartly in the next phase of this narrative."

Silver levels

 

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