Silver increases long positions

Increased risk appetite and the U.S. dollar’s weakening are leading to a rise in precious metal prices, with silver recently outperforming gold. In March silver prices rose by more than 15%, the best month since December 2020, while the gold/silver ratio fell to the 2-month low. The white metal remains undervalued. 

Regarding the recent release of the core consumer spending index in March, Wells Fargo analysts maintain their forecast of a 25-basis-point rate hike at the monetary policy meeting in May.

Per capita spending grew by only 0.3% in February, but the Fed still faces the challenge of reaching its 2% inflation target.

While the latest data on inflation show a slight improvement, the indicators remain higher than the target, causing fears of the upcoming Fed meeting.

Speculation on the Fed’s interest rate hikes and inflation data could affect the value of currencies, which in turn might affect the demand for commodities such as silver.

Silver prices are in an uptrend on the H1 timeframe, pushing off the support level, and continue their way towards the main trend. The Stochastic Oscillator indicator (standard values) confirms an uptrend after moving from the oversold zone.

If the pricing of silver is considered in terms of the wave analysis on the D1 timeframe, the price is in the stage of forming the third ascending wave, which also indicates a large upside potential. The previous forecast is still valid.

The third wave will show the real impulse of the movement only after breaking through the level of 24.55, which is the top of the first wave (the price is slowly approaching the key resistance).

The price pullback from the trend support on the H1 timeframe gives market participants an additional signal to buy silver.

The Signal:

The short-term outlook for silver suggests buying.

The target is at the level of 25.30.

Part of the profit should be fixed near the level of 24.20.

Stop-loss is set at the level of 23.40.

The bullish trend is of short-term nature, so it is worth to pick up the volume of trade not more than 2% of your balance.