- Silver’s meteoric run continues as the precious metal surges above $27 an ounce.
- The gold/silver ratio is testing a major wave at 75.44.
Silver 1 hour chart
Silver had another bullish session on Wednesday, which now brings year-to-date performance to a whopping 48%. Holdings of silver-backed exchange-traded funds (ETFs) hit a record 8,445 tonnes this year. This is almost double the previous high of 2009. The precious metals complex has had a good run lately and it works normally when the market expects an inflation problem. This time around, some market participants believe the Fed’s actions to deal with the COVID-19 pandemic could raise inflation rates.
Looking at the chart below, it looks like XAG/USD has reached some resistance at $27 per troy ounce. If there is going to be a price drop, the previous wave at the red resistance line could be a support zone. $26.20/oz was a strong resistance area in the past and this time around may help stem the losses. If the level breaks, there is another area of support at the blue level near $24.78 an ounce.
Gold/Silver Ratio Weekly Chart
The weekly gold/silver ratio chart shows a clear trend change. The black trendline has now been removed, which is significant as it spans nine years. On the lower frames, the support level at 75.44 has also been broken, although price is back above now. If this trend continues, there could be more potential in solver than gold and the ratio is certainly one to watch.