Silver quotes have been in the flat for 3 weeks, with the upper limit at 23.5 and the lower limit at 22.5 dollars per ounce. Now the price is gradually approaching the 22.5 mark, from which another wave of growth may start. In the absence of a directional trend, trading with the expectation of a rebound from one boundary of the flat to another is of considerable interest to market participants.
From the beginning of the current week, silver was under pressure from the growth of the U.S. Treasury bond yields. American debt obligations leveled part of the losses incurred on the background of Friday's publication of weak statistics on the labor market for October. The yield on 10-year bonds fell from 5% to 4.6% and is now gradually recovering.
Nine Fed officials are scheduled to give speeches this week. They are expected to provide an update on the future of the regulator's monetary policy. At the end of the last two meetings, the U.S. interest rates remained unchanged. However, Jerome Powell at a press conference on November 1 still allowed the possibility of their further increase.
However, traders take a different point of view and expect the continuation of the pause on the part of the Fed. In this regard, analysts assess the prospects of silver and other precious metals as favorable. At the same time, silver serves both as an investment asset and an industrial metal and holds a unique position among precious metals. While silver production has seen an uptick in recent years, it has failed to keep pace with the rising industrial sector demand. This supply-demand imbalance can contribute to higher silver prices.
In addition, silver's appeal is enhanced by the halt in the cycle of interest rate hikes in practically all the world's leading economies. The refusal to tighten monetary policy makes metals more appealing assets for investment.
On the daily silver chart, the RSI indicator has unloaded overbought and returned to the area of average values. From a technical point of view, there are no significant obstacles for the price to rebound from the level of 22.5 towards the upper flat's limit of 23.5.
The following trading strategy may be offered:
Buy silver in the range of 22.5-22.8. Take profit - 23.5. Stop loss - 22.2.
Also, traders can use a Trailing Stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
