Contrary to gold, the corrective movement of silver is becoming visible. Quotes broke down out of the $24.5 to $26.0 flat range in which they had been trading for about a month. Yesterday the price fell by more than 5% during the day.
A senior technical analyst at Kitco.com believes that the price movement was caused mainly by profit fixation and weak liquidation of long positions in short-term futures by traders.
Edward Moya, a senior market analyst at OANDA, sees nothing critical about the drop in silver prices, because the bullish impulse has begun to give way to a bearish one.
Moya added that global economic uncertainty, the ongoing debate over the government debt ceiling, the upcoming default deadline and a possible banking crisis will continue to support precious metals.
Now the main drama is around the U.S. debt ceiling. By June this issue should be resolved, because that is when the U.S. government will run out of money. As it was before, the debt ceiling will be raised, and there will be no collapse of the global economy. In 2011, it was raised three days before the default in the States.
Thus, this driver of growth in precious metals will disappear soon, weakening the bullish factors for the increase in gold and silver.
This year, Bloomberg Intelligence experts are expecting gold prices will exceed the value of other precious metals such as silver, platinum and palladium. Rally in gold will be supported by growing risks of recession in the U.S., the company said in a May forecast.
The yellow metal's growth rate will increase in the second half of the year and will raise the gold-to-silver ratio.
Another negative aspect for silver.
According to the technical analysis, the price for silver has fallen out of a flat range. Now the rectangle, which was formed from December 2022 to February 2023, becomes relevant. Lower boundary of the new flat at $23.1 will be a further downside target. Stop-loss will be set at the level of $24,8. If the stop is activated, the growth of quotes will mean a return to the range of $24.5-26.0.
Decrease in the price of silver:
Take profit – 23.1
Stop-loss – 24.8
This content is for informational purposes only and is not intended to be investing advice.
