Silver price is winning its Thursday losses back and approaching the October highs. Demand for precious metals is increasing due to the conflict in the Middle East and expectations of a possible end of the Federal Reserve's monetary policy tightening cycle.
According to Capital.com financial analyst Kyle Rodda, there is concern that the confrontation between Israel and Hamas could escalate into a broader regional crisis. Investors are therefore increasingly interested in safe-haven assets.
Meanwhile, Fed Chairman Jerome Powell, speaking at the Economic Club of New York, said that rising bond yields are tightening financial conditions. This could eventually reduce the need for additional interest rate hikes in the US. The Federal Reserve's easing of monetary policy could have a positive impact on the price of precious metals.
According to the CME FedWatch tool, market participants expect the U.S. central bank to keep rates at current levels at its meeting next month.
Phillips Baker, CEO at Hecla Mining, expressed his views on silver's future prospects in an interview with Kitco News this week. Investment demand for silver has been quite weak for most of 2023. However, this could change due to the strong development of solar power that is driving prices higher.
Over the last decade, demand for silver, that has both precious and industrial metal characteristics, has increased by 150%. This is evidenced by data from the Silver Institute. About 140 million ounces of the white metal were used in the production of solar panels last year. This year, the figure is expected to rise to 160 million ounces.
The International Energy Agency predicts that by 2027, solar power generation will surpass coal-fired power generation. In this case, to meet the future demand for silver, the market supply will have to increase significantly.
Silver price is forming a new uptrend on the H4 timeframe. Bulls Power indicator (standard values) is in the positive zone, which signals the strengthening of the uptrend channel.
The short-term outlook for silver is to buy.
The target is at the level of 25,000.
Part of the profit should be fixed near the level of 23,750.
A Stop-loss should be placed at the level of 22,000.
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.