Silver trading sideways since Jan 2021. Recent macro-environment, demand-driven expansions, positively influence XAG however talks of earlier interest rate hikes in Q2 2022 diverted market to dollar assets putting pressure on the USD side.
Fundamental Factors: Industry demand for silver is still up since March 2020 however recent slowdown in new housing builds and earlier than expected interest rate hikes deterring infrastructure investments may impact industrial use of silver. Moderate economic shocks seen from volatile commodity prices (silver supply inputs), supply chain disruptions, and China's bond market contribute to continuing risk-off sentiment continues to benefit risk aversion assets such as crypto, silver, and gold.
Supply on the other hand has been declining across 12 out of the largest 20 silver mining countries and the largest silver miners from Mexico and Peru have confirmed reducing mining forecast in FY22. Supply of silver is expected to slump towards the end of this year with intense cost pressure on miners from significant increases across all input costs - freight costs continue to be positively influenced by disrupted supply chains, labor market has been extremely short and unemployment rate has been on the decline, energy prices inputs such as coal and oil prices still at multi-year high albeit prices have retracted a bit (sticky input prices). COMEX inventory has been on the decline since 2015 highs (70m Oz) and currently near multi-year low from mid-2011 (30m Oz).
There are no short of both bullish and bearish factors for XAGUSD. Since XAGUSD has been seesawing $20-30, technical factors have high possibilities to dictate near-term price actions.
Technical Factors:
- Clear price floor and ceiling between $20-30 since Aug 2020
- Downward trend from June 2021 broke a key pocket of support at $23.80 confirmed downward bias
- Downward trend is still in play, however did not break below $21 in Oct 2021 and have since rebounded, recently tested resistance at $24.70
- Upward trend since Oct 2021 showed higher trading volume off downward trend since June 2021
- 21-day RSI touching mid-range coincide with a strong daily bullish hammer (03 Nov 2021) off $22.8 support and closing at 21-day MA
Summary/TLDR:
Swing trading setup: Long XAG/USD, stop loss at $21.4 (Risking 10%), target $25.5-$30 reviewing weekly (Risking 8%-27%)
Fundamental Factors: Industry demand for silver is still up since March 2020 however recent slowdown in new housing builds and earlier than expected interest rate hikes deterring infrastructure investments may impact industrial use of silver. Moderate economic shocks seen from volatile commodity prices (silver supply inputs), supply chain disruptions, and China's bond market contribute to continuing risk-off sentiment continues to benefit risk aversion assets such as crypto, silver, and gold.
Supply on the other hand has been declining across 12 out of the largest 20 silver mining countries and the largest silver miners from Mexico and Peru have confirmed reducing mining forecast in FY22. Supply of silver is expected to slump towards the end of this year with intense cost pressure on miners from significant increases across all input costs - freight costs continue to be positively influenced by disrupted supply chains, labor market has been extremely short and unemployment rate has been on the decline, energy prices inputs such as coal and oil prices still at multi-year high albeit prices have retracted a bit (sticky input prices). COMEX inventory has been on the decline since 2015 highs (70m Oz) and currently near multi-year low from mid-2011 (30m Oz).
There are no short of both bullish and bearish factors for XAGUSD. Since XAGUSD has been seesawing $20-30, technical factors have high possibilities to dictate near-term price actions.
Technical Factors:
- Clear price floor and ceiling between $20-30 since Aug 2020
- Downward trend from June 2021 broke a key pocket of support at $23.80 confirmed downward bias
- Downward trend is still in play, however did not break below $21 in Oct 2021 and have since rebounded, recently tested resistance at $24.70
- Upward trend since Oct 2021 showed higher trading volume off downward trend since June 2021
- 21-day RSI touching mid-range coincide with a strong daily bullish hammer (03 Nov 2021) off $22.8 support and closing at 21-day MA
Summary/TLDR:
Swing trading setup: Long XAG/USD, stop loss at $21.4 (Risking 10%), target $25.5-$30 reviewing weekly (Risking 8%-27%)
