- Silver prices continued their uptrend and hit a four-month high of $21.65.
- US dollar weakness boosts precious metals.
- The pair needs to consolidate above the $21.30/50 resistance area.
Silver prices continued to rally on Tuesday after suffering a moderate pullback on Monday, with the white metal extending above the $21.30 resistance area to hit a fresh four-month high of $21.65
Precious metals appreciate when the US dollar falls
In the absence of relevant macroeconomic data and with the US election in the spotlight, precious metals rallied during the North American session. US Treasury Department Bind have responded with declines to the first polls pointing to a Republican victory, dragging the US dollar down with them.
The USA dollar index is down after modest gains during the Asian and European trading sessions, extending its reversal from last week’s highs of 113.15 to a six-week low in the 109.30 range.
A Republican takeover will most likely result in a deadlock in Congress and deadlock on stimulus measures projected for 2023. This would ease the pressure on the Federal Reserve to continue rising Prices at the current pace that has brought the idea of moderate pivot back to the table.
XAGUSD is struggling in the $21.30 resistance area
Silver prices are now attempting to consolidate above the $21.30/50 resistance area where the 4th October high and the 38.2% Fibonacci Retracement levels of the March-August decline meet the 200-day SMA>
Above that, the next potential targets would be the mid-June highs at $21.90 ahead of the 50% Fibonacci level at $22.45.
However, the pair has reached overbought levels on the hourly and daily charts, foreshadowing the possibility of a moderate pullback before another rally should be considered.
Immediate support lies at the daily level of $20.60, ahead of the $20.00 round level and the 50- and 100-day SMAs at $19.30/50.
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