Key Takeaways:
Silver rose 5 percent to $62.48 per ounce on Aug. 5 as the dollar weakened and Treasury yields fell after the U.S. Treasury revoked Iran-related sanctions.
"Silver has support at $59.10-$58.40 per troy ounce and resistance at $61.60-$62.80," Manoj Kumar Jain, a commodities analyst at Prithvi Finmart, said.
The move broke silver above its prior high of $60.894, ending a descending top formation and shifting the primary trend upward, according to FXStreet technical analysis. The metal now faces the 50-day moving average at $62.62. Spot gold rose 3 percent to $4,279 per ounce, while platinum gained 1 percent to $1,751.03.
The Friday non-farm payrolls report will determine whether the dollar sell-off continues to fuel silver's advance or revives rate-hike trades.
The 10-year Treasury yield fell to 4.60 percent from near 4.75 percent, a significant move for silver, which had traded against rising interest rates for three consecutive weeks. The dollar index slid to a six-week low near 99.85 after last week's yen intervention forced dollar longs to close positions.
Traders now price a 59 percent probability of a Federal Reserve rate hike at the Sept. 15-16 policy meeting, down from 67 percent a day earlier. Kansas City Fed President Jeff Schmid reiterated Tuesday that tighter monetary policy is needed to bring inflation back to target.
The U.S. Treasury revoked Iran-related sanctions, while Qatar said mediators were making progress toward ending the U.S.-Iran conflict. Iran has denied claims of direct talks with the United States, and any statement from Tehran could trigger volatility in crude oil prices, which have fallen on the prospect of eased shipping disruptions.
Silver needs crude oil to stay low, yields to remain stable, and the dollar to stay under pressure to keep rising. If any of those factors reverse, the rally faces challenges. On the downside, a break below the 50 percent retracement at $60.835 would signal a return of selling pressure, with a retest of $58.00 possible.
This article is for informational purposes only and does not constitute investment advice.
