Preparing for the meeting of the Reserve Bank of Australia
In this review, we suggest considering the personal composite instrument (PCI) «XAGAUD». It reflects the price dynamics of silver against the Australian dollar. Is there a possibility for the XAGAUD to rise?
Such a dynamic is observed in case of the strengthening of silver and weakening of the Australian dollar. The next meeting of the Reserve Bank of Australia (RBA) will be held on Tuesday, August 7. The probability of a rate cut to 1.25% from the current level of 1.5% is 40%. Let us recall that both the real decline, and the RBA’s statements about the intention to lower it, can have a negative impact on the exchange rate of the Australian dollar. An additional factor may be the aggravation of trade relations between the US and China after US president Donald Trump’s unexpected announcement of a possible increase in import duties on Chinese goods. Because of this, the next round of trade negotiations between the two countries, scheduled for May 8, may be even postponed. Concerning the growth prospects of silver prices, there can be noted a reduction in world production by 2% last year and a continuing global shortage of this metal. An additional factor may be the alignment of growth rates of silver prices after their strong lag in comparison with more expensive gold. The gold/silver ratio reached the high from October 2008. Relatively cheap silver strongly attracts jewelry buyers. In 2018, silver consumption by the global jewelry industry increased by 6% to 61.1 million ounces.
On the daily timeframe, XAGAUD: D1 has moved from the downtrend to the neutral one. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of high demand for silver and easing of the monetary policy by the Reserve Bank of Australia.
Summary of technical analysis
Position Buy
Buy stop Above 21.45
Stop loss Below 20.65
In this review, we suggest considering the personal composite instrument (PCI) «XAGAUD». It reflects the price dynamics of silver against the Australian dollar. Is there a possibility for the XAGAUD to rise?
Such a dynamic is observed in case of the strengthening of silver and weakening of the Australian dollar. The next meeting of the Reserve Bank of Australia (RBA) will be held on Tuesday, August 7. The probability of a rate cut to 1.25% from the current level of 1.5% is 40%. Let us recall that both the real decline, and the RBA’s statements about the intention to lower it, can have a negative impact on the exchange rate of the Australian dollar. An additional factor may be the aggravation of trade relations between the US and China after US president Donald Trump’s unexpected announcement of a possible increase in import duties on Chinese goods. Because of this, the next round of trade negotiations between the two countries, scheduled for May 8, may be even postponed. Concerning the growth prospects of silver prices, there can be noted a reduction in world production by 2% last year and a continuing global shortage of this metal. An additional factor may be the alignment of growth rates of silver prices after their strong lag in comparison with more expensive gold. The gold/silver ratio reached the high from October 2008. Relatively cheap silver strongly attracts jewelry buyers. In 2018, silver consumption by the global jewelry industry increased by 6% to 61.1 million ounces.
On the daily timeframe, XAGAUD: D1 has moved from the downtrend to the neutral one. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of high demand for silver and easing of the monetary policy by the Reserve Bank of Australia.
- The Parabolic Indicator gives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. Both Bollinger bands are titled upward.
- The RSI indicator is above 50. It has formed a positive divergence.
- The MACD indicator gives a bullish signal.
Summary of technical analysis
Position Buy
Buy stop Above 21.45
Stop loss Below 20.65