Silver turns higher

25. Jan.

There’s a bit of life coming back into precious metals with both gold and silver firmer in early trade on Thursday. The weaker dollar is providing a bit of a catalyst for the upside move, although it’s worth noting how the Dollar Index bounced sharply yesterday afternoon, and it remains in consolidation-mode rather than indicating the start of a turn lower. Silver is taking the lead this morning and is up over 1% at the time of writing. It is now a full dollar above the low hit on Monday when it briefly broke under $22 per ounce. Looking at the daily chart above, we can see that the MACD has turned up a touch (this is far more pronounced on the 4-hour chart) suggesting that momentum is supportive of higher prices. But bear in mind silver’s history of high volatility which can see violent intra-day price swings. Upside momentum may be picking up, but that doesn’t rule out another visit to recent lows.

Gold remains perilously close to a significant band of support between $2,000 and $2,010. This must be a concern for the bulls. But they could counter that gold has held up surprisingly well considering the stark re-evaluation of the probability of the first 25-basis point Fed rate cut coming in March. According to the CME’s FedWatch Tool, the probability has now dropped to just 42%, from 77% two weeks ago.