Silver Price Forecast – Will Play Catch Up – XAG/USD Key Levels

Silver Price Forecast Outlook:

  • The latest changes in the sentiments show that the silver prices might soon break out of the fresh highs.
  • The silver volatility already began edging higher, and this gives the relative performance for other classes, which might be a sign that additional gains are coming for the prices of silver.
  • The prices of silver have lagged their golden peers during the COVID-19 Pandemic.

Price of Silver Lags – Ready to Break Out

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The increased Federal Reserve Bank’s liquidity throughout the COVID-19 pandemic without a doubt stabilized the financial markets. While the bank’s liquidity flooding initially got the pathway of reduced resistance by flowing towards gold, the prices of silver were left behind. One year later, the prices of gold have risen by up to +18.3% as the prices of silver increases by only +2.3%.

With COVID-19 pandemic “second phase” persisting in the USA, specifically, the possibility of constant low rates and additional financial deficits has built an environment for falling real assets- the environment where the prices of silver tend to outperform others. Together with the increasing volatility amongst other precious metals, there is no doubt that the prices of silver might start playing catch-up with Gold.

It’s worth taking note of the fact that at the peak of the united states real estate market crash and in the initial phases of the Great Recession back in 2009 and 2008, neither silver nor gold prices performed perfectly. Rather, the gains of the two commodities came from the aspect of a stabilized financial market, the silver and gold Bull Run was very strong in 2011 and 2010, particularly peaking September 2011.

Prices of Silver Run Ahead of Its Volatility

While both silver and gold are very precious metals which enjoy a safer haven even during the uncertain times in the financial markets, the scope and scale of the current economic fallout from COVID-19 pandemic have significantly shifted the traders focus from silver’s positive nature even during a crisis to a more negative outlook during a historic collapse.

Although other classes of assets do not thrive under increased volatility (signaling additional uncertainty around coupon payments, dividends, cash flows, and more). Essentially, precious metals seem to greatly benefit from timelines of high volatility as uncertainty increases the appeal of the silver.

Silver volatility has rebounded over 10% from the June low. At the moment, silver is trading at about 34.42. Nevertheless, the volatility of silver remains considerably depressed relative to the all-time high that it has set back in March when it hit 113.68.

SILVER VOLATILITY ANALYSIS: PRICE CHART (MARCH 2011 – JULY2020)

PRICES OF SILVER

IG Client Sentiment Index – Silver Prices Forecast (July 8, 2020)

Silver retail investor data suggests an 87.18% of investors are net-long with a ratio of investors long-short at 6.8:1. 0.47% is the number that shows the number of investors net long lower than yesterdays and about 1.83% higher from the previous week. Although the number of investors’ net short is about 8.05% higher as compared to yesterdays and about 5.62% higher from the previous week.

We generally assume a contrarian perspective to crowd sentiment and the fact investors are net-long shows a likelihood that the prices of silver might continue falling. Also read through the Gold Price At Risk as Crude Oil Waits for Canadian GDP Data to learn more about what to expect in the next few weeks.

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