Over the last month, the silver price has risen by more than 27%, and during the week it has regularly updated maximums of last April. In terms of growth rate, silver left all other metals, including gold, far behind. The fundamentals on the silver market look really positive, but opening new long positions at the current overbought level of technical indicators does not seem to be the smartest decision. First, it is worth waiting for at least a slight pullback.
OctaFX experts predict that silver will reach the 9-year high at the level of $30 per ounce. It will be facilitated by the reduction of silver reserves and steadily high demand for the metal in the industry. Silver consumption is increasing as the world’s interest in electric vehicles, solar panels and renewable energy sources grows.
However, dedicated silver mines are large and very expensive projects, so silver production is expected to grow slowly in the near future, and it will mostly be mined as a by-product of other metal production. Lower inflation and possible future monetary policy easing by the Fed will also be favorable for the price of silver.
India, which imported a record amount of the metal in 2022, supports the silver fundamentals. A sharp rise in demand for silver in Asia led to a reduction of stocks of the metal in London reserves to their lowest level since the beginning of statistics. And in 2023, the upward trend in silver demand persists.
The further silver price increase is the basic forecast in the market of precious metals, however, at the moment there is a higher chance of a local correction scenario. The RSI indicator is in the overbought zone, and Stochastic lines generated a sell signal. The buy signal is going to be at the level of 24.6.
The following trading strategy can be suggested:
Buy silver in the range of 24.5–24.7. Take profit — 25.1. Stop loss — 24.2.
Traders can also use a Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
