Silver bounces back together with gold amid the latest data on business activity and consumer confidence in the U.S. The data turned out to be worse than expected and showed that aggressive rate hikes affect several economic processes. A potential recession in the US economy could force the Fed to cut rates earlier than expected.
JP Morgan, the largest U.S. private bank as of December 31, 2022, made a big bet on a fall in silver. The bank held a large put option worth about $1 billion through the world's largest silver ETF fund iShares Silver Trust (SLV). Other US banks sold their stakes in the iShares Silver Trust ETF late last year. These banks include Bank of America -10% of total SLV ETF position, BNP Paribas -18% of total SLV ETF position, Goldman Sachs -20% of total SLV ETF position and UBS -26% of total ETF SLV position.
There was information about the latest silver trades of U.S. banks. Data is relevant at the end of 2022. Since then, silver has declined in price by nearly -12%. At the moment the shares of banks in silver may have begun to recover, but we will learn about this much later. Therefore, the announcement of reductions in bank positions in silver can be a "rear-view mirror". That’s why it is necessary to pay attention to current and predicted economic data.
According to technical analysis, silver is still in the downtrend. However, the downtrend of gold was broken, and now it can work as a leading indicator for silver. Silver could overcome the 0.5 Fibonacci level from bottom to top on the entire wave of growth. The next target will be 0.382, which corresponds to $21.9. There is also a resistance level that was traded in mid-February. A stop-loss can be placed when going below $20.5, it has served as support for silver prices three times in recent months.
Growth in silver price:
Take profit — 21.9
Stop-loss — 20.5
This content is for informational purposes only and is not intended to be investing advice.