The silver price has corrected to the most important support level. The news background is positive, so the probability of a rebound is quite high.
Analysts forecast an increased demand for silver due to its growing industrial consumption amid the energy transition.
As Metals Focus analysts believe, demand for silver will continue to grow, putting pressure on supplies and pushing up prices. According to the company's latest report, industrial silver consumption has been growing steadily over the past decade.
The manufacturing sector's share of total demand for the white metal has increased to about 50%. The electronic and electrical industries, as well as "green" energy technologies, have played a major role in this process. The surge in the development of the latter could lead to a permanent shortage of silver in the future.
In the latest review of the global solar market from Solar Power Europe, the forecast of installed capacity for the current year was increased by 33% compared to the previous estimate.
Analysts also expect silver to start outperforming gold. The white metal historically has a high beta.
Silver remains dependent on changes in the value of gold. However, the situation in the market indicates a great potential for the white metal while the gold price is growing. According to the latest data, the daily growth of silver contract prices amounted to almost 2%, while for gold the growth did not exceed 0.5%.
According to some analysts, yellow and white metals will benefit from the anticipated end of the U.S. Federal Reserve policy tightening cycle. Economists estimate that the probability of rates remaining unchanged in September is 79.5%.
Also, the U.S. Department of Energy intends to spend $45 million on renewable energy production development. Therefore, industrial demand for silver may increase.
According to technical analysis, the silver price is at the lower boundary of the pennant. On the background of positive fundamentals, it is highly probable to grow.
The upper boundary of the pattern at $24.50 will be the target. The resistance in the form of a rectangle, which was relevant at the end of last year, is also located there. A stop-loss could be placed upon breakdown below the support at the level of $22.65.
A rise in the price of silver:
Take profit – 24,50
Stop-loss – 22,65
This content is for informational purposes only and is not intended to be investing advice.
