Silver subdued beneath 21DMA, but recent uptrend intact

• Silver trades choppy amid an indecisive US dollar, with gains for now capped by the 21DMA at $24.33.
• The precious metal continues to respect a recent uptrend linking the 4, 9 and 11 November lows.

Despite higher gold prices and a marginally softer USD, silver (XAG/USD) trades flat on the day at roughly $24.30. 

Rangebound silver takes its cue from indecisive US dollar

Silver has, for the most part, stayed within recent intra-day ranges on Thursday. Subdued price action during Thursday’s US session is in fitting with choppy USD conditions.

FX markets have adopted a more risk-off feel in recent trade; risk-sensitive currencies such as AUD, NZD, CAD, NOK and GBP are all seeing downside alongside global equity markets in the wake of comments from Fed Chair Powell at the ECB’s annual Sintra event. The Chairman of the Federal Reserve expressed concern over the current state and direction of the pandemic in the US in the short-term and again called Congress to do more to assist the economy. Moreover, Powell played down recent vaccine optimism, saying that though the latest news is good for the medium-term outlook, it is too soon to assess the impact of recent vaccine news on the economy.

Nevertheless, recent risk-off flows have failed to significantly benefit USD, with notable strength in EUR (EUR/USD is holding above 1.1800 for now) preventing the Dollar Index (DXY) from convincingly rallying back above 93.00. That means DXY still trades marginally lower on the day and, as long as this choppy/rangebound trade persists, silver is likely to continue to follow suit.

XAG/USD gains capped by 21DMA for now

Acting as a notable level of resistance for silver right now is its 21-day moving average at $24.33. Since breaking below its 21DMA on Monday, following the Pfizer/BioNtech vaccine update, XAG/USD has been unable to convincingly rally above this level. The only time it did manage to make a serious attempt at breaking above the moving average, silver had its gains roadblocked by the 38.2% Fibonacci retracement from its weekly high of $26 to this week’s low of $23.56, standing around $24.50. In terms of upside resistance then, these are the two major levels to watch in the near-term.

Taking a broader view of recent silver price action, however, the precious metal continues to respect a recent uptrend linking the 4, 9 and 11 November lows. Prior to testing this uptrend, XAG/USD would have to break below the 23.6% fib of the same downward move at $24.15, and the psychological $24.00 level, both also important support levels to keep an eye on.