A technical rebound is possible after silver sell-offs

28 September 2023 122
A technical rebound is possible after silver sell-offs

Precious metals accelerated their decline due to growing volatility in financial markets. The reason for the fall remains the same: central banks do not intend to reduce interest rates in the near future. Silver also showed downward dynamics.

The market is now awaiting the release of new US economic data to get hints about the Federal Reserve's (Fed) future monetary policy.

Statistics released on Wednesday showed a rise in US durable goods orders for August. Spending by companies on equipment is likely to pick up momentum.

Meanwhile, on Wednesday, Minneapolis FRB President Neel Kashkari expressed uncertainty about the end of the US rate hike cycle despite ample evidence of continued economic growth.

Republican leader in Congress Kevin McCarthy on Wednesday rejected a stopgap funding bill, bringing Washington closer to its fourth partial shutdown of the US government in a decade.

US budget problems could become a reason for the precious metals market’s reversal.

Also, the Fed's hawkish stance increases the risk of recession. And the growing US budget deficit may also support precious metals.

It should be noted that many experts are much more optimistic about silver than about gold. The imbalance of supply and demand continues to grow on the silver market. Demand for silver remains high due to its wide industrial use in solar energy. At the same time, the metal mine stockpiles continue to decline.

According to the technical analysis, silver is trading in a triangle formation. It has a clear support line, which the price touched at yesterday's trading session. At least a technical rebound is possible now. Building a Fibonacci grid from the entire correction wave from the highs of the current year will help in determining the nearest growth target.

The growth target will be at the level of $23.1. The mark of 0.236 Fibonacci is located there. A stop-loss should be placed at the update of the local minimum of the last months, which corresponds to the price of $22.1. If the price falls lower, it means an even bigger sell-off in the precious metals market.

Silver price growth:

Take profit — 23.1

Stop-loss — 22.1

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

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