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Silve Brace for US Election Results, Fate of Stimulus, Trade Wars

Silver has been in a consolidative state since the end of September. Investors have been kept on the edge, awaiting the outcome of another US fiscal stimulus package. Now, with the US presidential election just around the corner, will its outcome determine what is to come for XAG/USD and the ‘red metal’?

XAG/USD can at times be seen as an anti-fiat hedge, similar to gold. A by-product of easing measures the Federal Reserve took this year to support the economy was a cheaper Dollar as volatility ebbed. This boosted silver prices, which are still up over 30% this year.

Now in the near term, silver price is awaiting the results of the US election. In addition to the fate of another stimulus package, the continuation of trade wars is also on the table. Rising prospects of a Biden-win scenario have opened the door to more aid, depending on the makeup of the Senate. This could in turn bode well for silver price.

A victory for incumbent Donald Trump will likely stir volatility in the coming days. That may boost demand for liquid hedges, of which the US Dollar and Treasuries are the traditional go-to options. Such an outcome could dent silver prices.

SILVER TECHNICAL ANALYSIS
Silver prices are pressuring a descending channel of resistance from late August. The technical outlook is slightly tilted to the downside in the aftermath of a bearish ‘Death Cross’. That was formed in September when the 50-day Simple Moving Average (SMA) crossed under the 20-day SMA. Meaningful upside progress likely entails a push above the 25.04 – 25.56 resistance zone. A resumption of the July top would place the focus on the September low at 21.66.


Reference by: Daniel Dubrovsky, Currency Analyst for DailyFX.com

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