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Silver Consolidating Near 20

8/3/2022 12:27 PM

During the Asian session, silver prices show ambiguous trading dynamics, consolidating near 20.00. The trading instrument is trying to recover from yesterday's active decline, which prevented it from consolidating at new local highs of June 30.

The downward dynamics were due to the liquidation of speculative positions, which were growing during the day against the background of the visit of the Speaker of the US House of Representatives, Nancy Pelosi, to Taiwan. Investors feared a sharp aggravation of the situation and possible hostilities in the region, but in the end, no one interfered with Pelosi's landing. Nevertheless, it is still premature to talk about the removal of tension in US-Chinese relations: the Chinese authorities have officially protested Pelosi's visit and announced large-scale military exercises that could lead to a temporary blockade of the island.

Soon, investors will try to switch to the economic agenda, where July's US labor market report will take center stage this week. As before, they want to catch the tone of the US Federal Reserve: the regulator is preparing to reduce its activity against a further tightening of monetary policy, and in September, the market expects a rate increase in the range of 0.25–0.50%.

The driver of the growth in the price of the precious metal is the decision of Democrat Joe Manchin to support in the Senate a bill to allocate 2.3B dollars to combat climate change. The initiative will increase funding for the construction of wind farms and related infrastructure off the coast of the Atlantic Ocean and the Gulf of Mexico of Florida, and since some solar panels contain silver cells, this could increase demand for the asset.

On the daily chart, Bollinger Bands are growing moderately: the price range is expanding from above, letting the "bulls" renew local highs. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line), and trying to consolidate above the zero line. Stochastic, having reached its high, reversed downwards, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 20.00, 20.48, 20.86, 21.40. | Support levels: 19.74, 19.50, 19.00, 18.71.

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