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Silver Prices are Recovering

1/26/2023 11:02 AM

During the Asian session, the XAG/USD pair shows ambiguous trading dynamics, holding near 23.80.

Investors are in no hurry to open new positions in anticipation of the publication of key US Q4 gross domestic product (GDP) data: experts expect a decline from 3.2% to 2.6%, which will confirm further softening of the "hawkish" rhetoric of the US Federal Reserve. On Wednesday, February 1, the regulator may announce an increase in interest rates by only 25.0 basis points, and analysts do not exclude another correction of the value by a similar amount in the first half of the year, after which a pause is expected to assess the effectiveness of the measures taken. The European Central Bank (ECB) and the Bank of England are more resolute so far that silver remains dependent on possible increases in interest rates. Also, the Bank of Japan, which has long adhered to the "dovish" monetary policy, may soon begin to tighten it.

According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in silver amounted to 31.5K versus 29.0K a week earlier: "bears" are in the lead in the number of contracts at swap dealers, and the gap is held regardless of the decrease in the interest of this group of investors in the asset, amounting to 45.728K against 34.865K for the "bulls." This week, sellers have reduced their positions by 98 trades and buyers by 699.

The trading instrument is supported by hopes for further activity recovery in China, where the government has been gradually lifting quarantine restrictions since December. The China Gold Association reported a 10.63% decrease in metal consumption last year to 1,001.74 tons. In comparison, jewelry lost 8.01% to 654.32 tons, and investment in gold bars and coins fell by 17.23%, amounting to 258.94 tons. Still, experts expect that the opening of the economy can dramatically improve the situation.

On the daily chart, Bollinger bands are moving flat: the price range changes slightly, remaining quite spacious for the current level of activity in the market. The MACD indicator is falling but is trying to consolidate above the signal line and form a new buy signal. Stochastic shows more confident growth, rapidly approaching its highs, reflecting that the instrument may become overbought in the ultra-short term.

Resistance levels: 24.00, 24.20, 24.42, 24.67. | Support levels: 23.60, 23.32, 23.00, 22.70.

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