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The attention of leading investors for a long time was riveted on gold but at the moment, it has switched to silver. The white metal is experiencing an unprecedented rally, its price is steadily increasing. Experts seek to understand the causes of what is happening.

The current situation is largely influenced by the expectation of a possible reduction in interest rates by the Fed. Analysts believe that the price of market assets has already laid down a rate reduction of 0.25%. Experts do not exclude the possibility of its decrease immediately by 0.50%. According to experts, the adoption of such a decision will be the first but not the only step of the regulator in the beginning cycle of monetary incentives. The current situation greatly affects the asset markets, laying down certain inflationary expectations. Geopolitical tensions in the Middle East and a protracted US-China trade conflict contribute to this.

Exchange Rates 19.07.2019 analysis

In the short term, the precious metals market will continue to grow until the end of July. Its further dynamics will depend on the decision of the Fed. The yellow metal can rise to $1,500 for 1 ounce and analysts are sure, the cost of silver will go up after it. At the moment, after the rally of gold for almost a month and its successful growth, the white metal made a breakout.

A breakout is a sharp movement of currencies or metals and overcoming any conditional boundary (top, bottom or level of consolidation). Currently, silver quotes (XAG / USD) continue to move in an uptrend. The cost of the metal with a white and gray tint reached $16.42 in Friday morning trading, July 19. After some time, XAG / USD quotes fell slightly to $ 16.39 but this does not prevent their upward movement. A number of experts expect a rebound and continued growth in the price of silver, where the goal is to exceed the level of 16.55. Experts emphasized that they expect to accelerate the growth of XAG/USD quotes is in the case of overcoming the mark of 16.25.

This silver breakout took place against the backdrop of huge amounts of precious metals on the maximum since April 2011. Recall that at that time, the price of white metal briefly tested the mark of $49 for 1 troy ounce. However, after the euphoria collapse occurred, the key level of support becomes the level of 15.20 and further to 15.50 at the moment. Strong levels of 16.20 and 17.30 "hang" above the resistance. Experts find it difficult to say whether silver will reach this area in the coming days. The decisive time will be the end of this month.

Currently, most precious metals have great potential for growth. This is especially true of silver. White metal, like yellow, has entered a long-term growth trend and is not going to stop. Experts pay attention to a number of reasons related to the current rally of silver.

The movement of XAG/USD quotes is due to the overall positive dynamics of precious metals against the background of a possible slowdown in the global economy, the expectation of easing monetary policy and a fall in real interest rates. Meanwhile, silver is "catching up" in a rally in gold. Previously, the price ratio of gold and silver rose to its maximum level since 1993. There is space for the development of a "bullish" impulse, for example, towards levels of $17.1– $17.4.

Experts remind that in the early stages when the rally of gold is gaining momentum, silver is "asleep". However, the price of the white metal begins to "catch up" closer to the end of the growth wave and sometimes exceed the dynamics of gold. The fact that silver "awoke" indicates that the current trend of growth of precious metals can end in a correction, the analysts sum up.

Performed by l Kolesnikova,
Analytical expert
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