The silver could keep making new highs in the beginning of this week too following market concerns about the global inflation outlook has been triggered since the release of March consumer price index of china which has reached 5.4% yearly but by this way, it can be subjected to strong profit taken wave when the volumes get back to the markets after the Ester holidays.
While the markets are not expecting a close end of the Fed's While the Fed's adopted quantitive easing policy which is still weighing negatively on the greenback driving up the prices of the commodities and energy specially as it is still looking to the Fed that it is too soon to end this policy on the current economic situation as what has been said recently clearly by the Fed's Vice president Yellen which came inline with the recent statements of Bernenke which downplayed the risks of rising the energy prices over the long term referring to that the rising of the oil and commodities prices can be transity and this direction has been obvious in the recent meeting minutes of the Fed too with no reference to hike the interest rate until now and this direction can be maintained as long as we have seen no implication to be mentioned on US ISM manufacturing index which has come at 61.2 in March while the markets were waiting for just 60.5 from 61.4 showing no easing of the demand in the sector despite the rising of the commodities and oil prices which can give the conclusion that the easing period can be extended undermining the greenback having more rooms for prices to grow up with no tightening action to be taken against them underpinning the demand for the gold and the silver as a hedge against inflation.
From another side, the greenback came under pressure earlier last week by the shocking lowering of the US economy crediting by S&P rating agency to negative from neutral which increased the market worries about the US Economy which can be in need of further stimulating period as we are still getting from the Fed with no signals from the Fed to take a tightening step against the prices soon caring of the growth. The gold which is still well-supported by being above the trend line support extended from 1307$ to 1380$ has supporting levels at 1500$ psychological level right now after reaching 1517$ per ounce in the beginning of this week 1450$ then 1410$, 1393$ then 1380$ which has been reached after the Japanese earthquake.
While The silver could reach 49.78 in the beginning of this week following higher lows continued above 42 level at 42.18, 44.21 and 46.26 in a very short lived unprecedented correcting way following the strong inflation figures of china as a hedge versus inflation while situation in Libya is still mixed threating the oil supplies from the middles east to be cut.
The silver is surely well above the trend line support extended from 26.39 to 33.66 which is still underpinning it technically and over longer scales, it has supporting levels at 40.52 then 39.67 again following over a longer range by 38.04, 37.06 and 36.45 again.
Kind Regards
FX Market Strategist
Walid Salah El Din
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