Silver prices rose to late summer levels on Monday due to a weaker dollar and the widely expected end of the U.S. Fed's rate hike cycle.
Financial analyst at Capital.com Kyle Rodda explained that the reason for the growth of precious metals was the depreciation of the U.S. dollar due to the recent disappointing data on business activity (PMI). Updated U.S. economic indicators published this week, especially inflation, will have a strong impact on the future price movements of gold and silver. This will determine whether the white metal holds above the $24 level, Rodda added.
The market's attention is now turned to the revised U.S. GDP data for the third quarter, which is expected to be released on Wednesday. On Thursday, the U.S. Consumer Expenditures Price Index (PCE), the preferred inflation indicator for the central bank, will come into focus. Earlier this month, another inflation indicator showed weaker-than-expected consumer inflation. This reinforced hopes for a quicker start to monetary easing in the States.
Traders believe the Fed will not change interest rates in December and estimate the probability of a rate cut at about 60% next May. These estimates are based on the CME FedWatch Tool.
According to market analyst at Gainesville Coins Everett Millman, even after the multiple increases in gold prices above the $2,000 per ounce, the main precious metal has not yet shown a rally.
Meanwhile, the gap between silver and gold needs to narrow for silver prices to rise. This summer, the cost of the white metal reached $25 per ounce. So, until silver returns to this level, Millman keeps a neutral stance in the medium term.
As the analyst said, the silver price traditionally surges after a large-scale rise in gold prices. In percentage ratio the rally of the white metal is ahead of the yellow metal.
Silver prices are forming an upward correction 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 the 23.70 level has already taken place. The upward movement may intensify in the near term.
Signal:
The short-term outlook for silver suggests buying.
The target is at the level of 26.100.
Part of the profit should be taken near the level of 25.150.
A stop-loss could be placed at the level of 23.220.
The bullish trend is short-term, so trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
