Silver markets rallied a bit during the trading session on Friday, breaking above the $24 level again. Having said that, this is not necessarily a strong sign considering that we are starting to see US dollar strength and we still cannot seem to break above the 50 day EMA. I think at this point silver is more likely than not to show signs of consolidation with a slight pullback than anything else. After all, the US dollar does strengthen it will take less of those dollars to buy an ounce of silver.
SILVER Video 05.10.20
Silver markets are a little bit different than gold in the sense that they are not necessarily a safety trade, at least not in the same manner that gold is. Quite frankly, silver also has an industrial component to it that will be negated by the fact that we have less jobs being produced as shown during the trading session via the Non-Farm Payroll report. All things being equal, the $22 level underneath it looks to be rather supportive, so we could get a bit of a bounce there. Quite frankly, I would like to see this market drop even further, at least to the 200 day EMA, if not the $20 level. The $20 level of course is a large, round, psychologically significant figure, and the breakout point from which the rally started.
At the end of the day, this is all about the US dollar and its inverse correlation. If the US dollar strengthens, it could very well work against the value of silver overall. If the US dollar weakens, then silver should rally. I think it is basically coming down to that simple fact.
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