Key Points:
- Heightened global military tensions are seeing silver prices soar.
- The technical bias is also in favour of further upside action.
- The rally could extend up to the $19 handle and beyond.
In times of spiralling market fears, it’s only natural that we see gold prices spike higher but we shouldn’t forget the metal’s cheaper sister as it too is reacting strongly to recent geopolitical developments. Additionally, silver’s technical bias is highly supportive of ongoing gains which may mean that it is now poised to make that final push towards the $19 handle.
Starting with the developments of the past 24 hours, news that the US and Japan are strategizing military options against North Korea, should China fail to rein in the rogue state, has impacted the markets widely. Notably, safe havens such as gold and silver have spiked significantly and in both instances, this has erased the effects of last week’s US employment data.
Unlike the bluster and lip service that has almost become the norm when discussing North Korea, China’s unexpected move in pledging to take “strong action” if the nation fails to curb its nuclear programme speaks volumes about just how close we could be to an actual conflagration. Moreover, China’s movement of around 150,000 troops to near the North Korean border only adds certainty to how real it believes the chances of further destabilisation in the region are.
Furthermore, who can blame them? Less than a week ago the US struck a blow against the Syrian Regime in response to their use of chemical weapons in the ongoing crisis. Trump-era foreign policy seems to have no qualms with the use of force to project its ideals and protect its interests. Nevertheless, this in and of itself is adding to the overall political risks buoying silver prices as the tangled web of alliances in Syria put the US in danger of sparking a conflict with an increasingly firm-handed Russia.
Given there is no shortage of fundamental momentum behind silver, the metal may finally be able to recruit the support needed to push past the 18.47 handle that has, until now, capped upsides. If this is the case, the broader ABC wave should complete which would be in line with the highly bullish moving average bias and the neutral RSI readings. Additionally, that MACD signal line crossover that had some traders worried yesterday looks as though it may be a little bit of a false flag and can likely be ignored.
Ultimately, the combination of the fundamental and technical biases should see gains extend over the coming weeks. Indeed, should the state of global politics not improve in the medium to long-run, this rally could push beyond even the $19 handle that has been forecasted on a technical basis. Regardless, we will simply have to wait for Trump to navigate his foreign policy ‘baptism by fire’ and hope it doesn’t turn into one fuelled by nuclear flames.