Technical correction of silver prices may catalyze their medium-term growth

25 December 2023 84
Technical correction of silver prices may catalyze their medium-term growth

The silver price has stabilized around $24.15 per ounce. Last week there was a significant increase in the cost of the precious metal due to a drop in U.S. inflation. The price temporarily even reached $24.60 per ounce.


According to a report from the U.S. Commerce Department on Friday, the price index for consumer spending continues to decline. The Personal Consumption Expenditures (PCE) price index, which is the Fed's preferred inflation gauge, fell by 0.1% last month. This raised expectations of an imminent interest rate cut by the U.S. central bank.


Economists polled by Reuters believe that a sustained monthly inflation rate of 0.2% is needed to bring inflation back to the target level and to trigger a rate cut by the Fed. Financial markets estimate the likelihood of the rate cut at the Fed's meeting on March 19–20 at about 75%, according to CME Group's FedWatch tool.


As J.P.Morgan experts forecast, the price growth of gold and silver in 2024 will surpass the dynamics of platinum and palladium, as well as non-ferrous metals like copper and nickel. The bank's outlook is based on expectations of the Fed's monetary policy easing and falling U.S. real yields.


Metals Focus projects that the white metal is likely to face the impact of China's slowing economic recovery in 2024.

According to analysis provided by SFA (Oxford), the easing of monetary policy and subsequent weakening of the U.S. dollar should support silver.


As Rhona O'Connell at StoneX believes, the development of solar energy along with the electrification of the vehicle fleet will help silver in the long run.


Silver prices are in a broad correction on the D1 timeframe.


An uptrend is forming on the 4-hour timeframe. Divergence of the Relative Strength Index (RSI) (standard values) suggests a change in the direction of silver prices towards the trend channel support. The price rebound from this line near the 22.300 level will indicate an upward movement.


Signal:

The short-term outlook for silver suggests buying around the level of 22.300. 

The target is at the level of 25.550.

Part of the profit should be taken near the level of 24.550.

A stop-loss could be placed at the level of 22.000.


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.

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