Risk Aversion Lifts Silver
It has been an excellent week for silver, as the metal has gained 3.7%. On Wednesday, silver touched 18.46, its highest level since January 8. A key catalyst for this week’s rally was a warning from Apple that its first-quarter sales revenue would be lower than the initial forecast. Apple said that the coronavirus had hampered the delivery of iPhones from its factories in China.
The supply-chain disruptions to Apple’s operations in China are also affecting other multinationals that have set up shop in China, which will mean shortages in goods manufactured in China. This will likely have a chilling effect on risk appetite, which is good news for safe-haven assets such as silver. Gold has also benefited from the coronavirus crisis, as gold prices broke above the psychologically important $1600 level earlier in the week, for the first time since 2013.
Fed Concerned About Coronavirus
The Federal Reserve minutes, which were released on Wednesday, indicated that policymakers are cautiously confident that they can maintain current interest rate levels in 2020. At the same time, the minutes highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.
Silver Technical Analysis
Silver has managed to put some distance between itself and the 18.00 level, which is providing immediate support. Below, the 50-day EMA is currently situated at 17.74, followed by support at 17.50. The 200-day EMA follows at 17.04, just above support at the round number of 17.00. On the upside, there is resistance at 18.60, followed by resistance at 19.20.