Will Silver XAG turn bearish now?

Selling Silver XAU as Omicron Fears Abate, Chinese Economy Holds

Posted Monday, January 17, 2022 by
Skerdian Meta • 2 min read

Silver has been on a downtrend since June, as the US started to turn bullish on the back of hawkish FED comments after some really high inflation numbers. Safe havens started to retreat as the sentiment improved and the USD got stronger. The pace of the decline has slowed in the last few months, but the trend remains bearish, with highs getting lower after the retraces higher and moving averages acting as resistance.

Right now, the price is trading below the 50 SMA (yellow) and the 100 SMA (green) which have acted as resistance before. The price has formed two small dojis below these MAs, which are bearish reversing signals after the climb, and the price is overbought on the daily chart now. Apparently, the Omicron variant is not having a major negative impact on the economy.

I’ve mentioned quite a few times already that I just don’t see any bigger risk to the global recovery than China. The Omicron risks are something that will percolate to global supply chains, inflation, and thus to the central bank outlook as well. And with Beijing being hit now, there’s more scrutiny than ever, and suspicions that China will try to control the situation.

But it might not be too bad. The GDP figures from China this morning were okay, so the sentiment should improve in the coming days.

Chinese Q4 2021 GDP Report

  • Chinese Q4 QoQ 2021 GDP 1.6% vs 1.1% expected
  • Q3 GDP QoQ was 0.2%
  • Chinese GDP YoY 4.0% vs 3.6% expected
  • Prior GDP YoY was 4.9%
  • 2021 YoY GDP +8.1%

Comments by Chinese President, Xi Jinping

  • Overall momentum of China’s economy is sound
  • China will continue with reform and open up
  • The world economy still faces constraints
  • The world has found itself in a new period of turbulence and transformation
  • Countries should strengthen economic policy coordination

These are rather general remarks, but they set the tone for what to expect from the Chinese economy in the year ahead. Despite a shift to common prosperity, China’s economy is estimated to have recovered strongly from the pandemic last year, so Xi’s message is that it will continue to do so this year as well.

Silver XAG Live Chart

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