Silver Prices Recover After Attack on Saudi Oil Refinery Spooks Investors

Kenny Fisher

Silver has started the week with strong gains, after sliding 3.4% on Friday. In European trade on Monday, XAG/USD is trading at $17.83, up $0.40, or 2.2% on the day.

Silver Down, Silver Up

Silver has been acting as a safe-haven asset, and this has been evident in the past two days, as volatility has returned. AUG/USD had a quiet week until Friday, when the metal dropped sharply, hitting 3-weeks lows. Investors cheered as retail sales gained 0.4% in August, above the estimate of 0.2%. As well, UoM consumer sentiment ticked lower to 92.0, beating the forecast of 90.4. These readings raised investor risk appetite and sent silver sharply lower. The situation changed dramatically over the weekend, after Yemeni rebels attacked a Saudi oil refinery, knocking out some 50% of Saudi Arabia’s daily oil output (5% of the world’s daily oil production). This has triggered a spike in oil prices and sent silver prices sharply higher on Monday, as jittery investors have snapped up safe-haven assets.

Technical Analysis

The surge in volatility since Friday has put the 17.50 line in the spotlight. This line is currently immediate support. XAG/USD tested this line on Friday, but was unable to break through this level. This weak line could be tested on Monday if silver retracts. Below, there is support at the round number of 17.00. On the upside, I continue to keep an eye at the 18.00 line, which remains relevant. It is a weak resistance line and could be tested if silver can continue the current upward momentum.

XAUUSD 4-Hour Chart

This article was originally posted on FX Empire