Fundamentals indicate a decline in silver price

20 April 2023 170
Fundamentals indicate a decline in silver price

Silver is trading above the $25 per ounce level.

 

According to the Silver Institute report, global demand for silver rose 18% last year to a record high of 1.24 billion ounces. This led to a shortage of 237.7 million ounces. The Silver Institute described this situation as the most significant deficit ever observed.

 

On the other hand, higher inflation data from the UK and EU combined with hawkish comments from central bankers increase the likelihood of a rate hike. That puts pressure on silver prices. New York Fed President John Williams said he supports a 0.25% interest rate hike in May, invoking still high inflation.

 

On Thursday, market participants will keep an eye on the US weekly jobless claims data. The Manufacturing PMI from the Philadelphia Fed and secondary housing market sales data will also be published. 

 

The possibility of interest rate hikes in the US, as well as the UK and EU inflation could also put pressure on silver prices. The economic statistics could seriously influence the dynamics of silver prices.

 

A 52-week Treasury bill auction is expected today at 15:30 GMT. This event could affect the pricing of silver in case a large number of bills are sold at the auction. This may lead to an increase in government loans and consequently higher treasury yields. Such a scenario could result in a stronger dollar and lower gold and silver prices.

 

The silver price broke out of the H4 time frame uptrend, forming a corrective pullback.

 Fundamentals indicate a decline in silver price - Photo 1

The Relative Strength Index (standard values) shows a divergence, which also indicates a change in trend or a correction.

 

Signal: 

A short-term prospect for silver suggests buying.

The target is at the level of 24.20.

A Take profit could be placed near the level of 24.65.

A Stop-loss is at the level of 25.65.

The bearish trend is short-term, so trading volume should be no more than 2% of the balance.

This content is for informational purposes only and is not intended to be investing advice.

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