At the end of last week silver prices showed a strong growth of almost 7%. On Thursday and Friday, the bulls actively tried to break through the level of 24 from below upwards, but profit taking threw them back. After a powerful upward momentum, market participants clearly need to take a breather, but the scale of the correction may well be limited to 23.3. In the future, silver is likely to see a new wave of growth.
Investors are gradually changing their attitude to precious metals. According to the data from Heraeus analysts, in October the outflow of money from silver ETFs slowed down considerably. During the past month, the assets of silver exchange-traded funds decreased by only 50 thousand ounces. In comparison, during the 3rd quarter the monthly outflow exceeded 3 million ounces of silver. The situation with investments in the white metal has changed most dramatically in Germany. German ETFs increased the size of assets by 836 thousand ounces of silver at once.
Representatives of Heraeus also pay attention to the market of silver coins in the United States. In October, the amount of silver coins purchased by Americans was 3.94 million ounces. This was the second highest result of the current year, higher only in January. Since the beginning of 2023, the U.S. Mint has sold 21.8 million ounces of silver coins - 50% more than last year.
It is demand from the investment community that is expected to be the main driver of further silver price gains. According to Metals Focus, industry consumption of the white metal will increase by 8% through 2023. At the same time, investors will reduce silver purchases by 21%. However, in 2024, with the end of the rate hike cycle, silver demand will recover.
As long as silver prices have not fallen below the level of 23.3, the initiative in trading remains with the buyers. Silver may test the $24 per ounce mark once again in the coming days.
Consider the following trading strategy:
Buy silver at the current price. Take profit – 24. Stop loss – 23.3.
Traders may also 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.
