Silver quotes renewed their highs at the end of last week since April 2022. However, just like a month ago, it failed to consolidate above the 26 level. The price has now rolled back to around 25.5. Silver now has two main ways: a new rush to the year's highs or a continuation of the correction to the downside support at 24.8. However, in any of these scenarios, the fundamental prospects for silver remain favorable.
The head of strategic commodities at Citi Research, Edward Morse, believes that the precious metals market will remain volatile in the short term due to constant changes in expectations about interest rates. The U.S. Consumer Price Index data will be released today. A slowdown in inflation could strengthen markets' confidence in the end of the cycle of monetary policy tightening by the Fed. Morse expects the price of silver to rise above $29.50 per ounce this year.
In Mexico, the world's largest silver producer with a market share of more than 20%, discussions of mining reforms continue. They should limit geological exploration, tighten the rules of company reporting and shorten the terms of concessions. This raises concerns about the smooth operation of facilities. According to Fitch Ratings, the new law will negatively affect the mineral industry in Mexico.
The reforms will primarily affect geological exploration activities, which will be monitored by the Mexican Geological Survey. Although the details are not yet determined in concrete rules, the organization will allow exploration only after concluding special agreements of cooperation with private mining companies. Industry representatives have already announced a sharp decline of investments into new projects in Mexico if this law is accepted.
An interesting option is to open long positions on silver at 25.3, where the price was declining during yesterday's trading session. There is a high probability of a new growth impulse to the level of 26 in the future. A breakdown of support at 24.8 would cancel the growth scenario.
The following trading strategy option can be suggested:
Buy silver in the 25.2-25.4 range. Take profit – 26. Stop loss – 24.8.
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.
