Silver, as indicated in the previous forecast, failed to break through the resistance zone of 24-24.3. The local high was set at 24.16, and today it is a pullback. The current overbought condition indicates a high probability of the continuation in the correction movement towards the level of 23.3. At the same time, the fundamental situation is now on the silver side, and after a short pause, the upward trend is likely to renew.
The prospects for precious metals improved after the bankruptcies of Silicon Valley Bank and Signature Bank. MKS PAMP experts say that negative consequences of the aggressive tightening in monetary policy by the Fed became evident. The company changed its expectations for the average price of silver in the current year from $22.5 to $24 per ounce. MKS PAMP analysts also highlight the global dedollarization trend and growing geopolitical tensions among the reasons for the forecast revision.
Meanwhile, silver started to move ahead of gold in recent weeks. This caused the gold/silver ratio fall to a two-month low around 82 points. Fawad Razakzada, a market analyst at Forex.com, noted a break in the rising trend in the gold/silver ratio after the ratio fell below 86 points last week. Now, if the general trend of increasing prices for precious metals continues, silver should be ahead of gold.
Ole Hansen, head of commodity strategy at Saxo Bank, said that silver could rise to $25 or even $27 per ounce. He noted that the metal remains undervalued. Silver is supported both by industrial demand and as a safe-haven asset amid continuing concerns about the global economy.
As long as technical indicators continue to signal overbought conditions, buying silver is risky. For greater safety it is better to wait for a pullback closer to 23.3 and then gradually take long positions in silver. The growth target will be a return to the level of 24.
The following trading strategy option can be suggested:
Buy silver at a fall in the 23-23.3 range. Take profit – 24. Stop loss – 22,8.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
