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    XAG/USD: the future directions of Silver in comparison with Gold on 22.03.2016

    Following the US Fed decisions and comments about future monetary policy in the USA last week, the USD sharply went down all over the market. The US Fed left interest rate unchanged at the level of 0.5% and downgraded forecast of the future increase in the interest rate. It is planned that the rate will be raised twice, up to 0.875% in 2016 instead of four times as had been planned earlier. It was planned earlier that the interest rate would be raised up to 1.375% by the end of 2016. Although the US data has been positive lately, the USD is in the downtrend versus the main counterparts.

    Low interest rates in the USA help the rise in the price of the precious metals.

    Demand for the precious metals as safe haven assets is caused by geopolitical tension in some regions in the world and financial markets.

    Gold has grown by 19% since the beginning of the year. Today the price continues to rise since the beginning of the trading day.

    Silver has grown by almost 15% versus gold since the beginning of the year. Despite the decline in the price of gold in the past few days, many economists believe the price of gold will go up and by the end of the year gold can grow up to 1300 USD per ounce. It is expected that the price of gold can grow by 5% from the current level. Given the fact that the price of silver rises slower than the price of gold, the pair can grow by 8-10%. Currently the pair is at the level of 15.90 and taking into account the above evaluation we can expect that the pair will grow up to the levels of 17.15 and 17.40. If we follow the same evaluation, the price of silver can grow up to the level of 17.80 which is crossed by the moving average line with the period 144 on the monthly chart. The pair XAU/USD has been above the moving average with the period 144 on the monthly chart for a long time.

    Silver has another advantage over gold, which boosts the price of silver: silver is used in manufacturing industry and in the period of recovery and the rise in the manufacturing sector demand for silver goes up.

    The decline in the price below the level of 15.00 USD per ounce will cancel this scenario.


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