The silver price declined slightly on Tuesday due to a strengthening US dollar. Investors are waiting for the release of key economic data this week. The new figures could help to project how long the US Federal Reserve will continue rising interest rates to curb persistent inflation.
According to John LaForge, head of real asset strategy at Wells Fargo, gold and silver have underperformed other commodities over the past three years. The precious metals market has been stagnant as investors continue to pay close attention to the tightening of monetary policy in the US and the shrinking money supply.
At this point, the Fed is nearing the end of its tightening cycle. As a result, gold and silver may be on the cusp of a long-term bullish trend. However, it's only a matter of time before the US central bank starts to inject funds into the financial markets again in order to keep the economy out of recession. According to economists, there is a 79.5% chance of rates remaining unchanged in September.
With a sharp increase in the money supply there is a high chance of a further rise in the price of precious metals. According to analysts, such a rally could last about three years.
LaForge also noted that neither a significant increase in the money supply nor major changes in the US monetary policy are needed to keep metal prices at record highs. The market is already sensitive to the excess of the US government spending over its revenues.
Meanwhile, the July US employment report and ISM manufacturing and services surveys will be scrutinized by traders this week. These data will help to gauge the impact of higher borrowing costs on the economy.
There is a corrective decline of the silver price on the H4 timeframe.
In terms of wave analysis, the price is forming the third ascending wave. Breaking through the top of the first wave at 25,265 will strengthen the price’s upward movement.
Signal:
The short-term outlook for silver is to buy.
The target is at the level of 26,550.
Part of the profit should be fixed near the level of 25,280.
A Stop-loss should be placed near the level of 23.50.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
