Silver quotes at the trading session on Friday updated the maximum for 3 years, a little short of the most important level of $30 per ounce. With the approach of this mark, a large number of bulls decided to fix a good profit, which led to a strong pullback in the price. Since the end of March, silver prices have increased by more than 20%, so the current correction is a quite natural scenario. Decrease in quotations gives traders an opportunity to profitably increase long positions.
A downward reversal from the level of 30 matches a similar movement in silver prices in 2020 and 2021. Last time silver was above this level in early 2013. Analysts at TD Securities estimate this milestone as a very strong level of resistance, which will be very difficult to break through. However, in case of success, silver quotes can quickly reach the mark of 30.8, and a favorable fundamental background will provide support.
The latest news reflects a surge in demand for silver in the physical market. India's Ministry of Commerce and Industry released data for February, according to which silver imports to the country amounted to 2 300 tons. On a month-on-month basis, purchases surged by 260%, and in 2 months, India has already imported 80% of the amount of silver for the whole of 2023. Analysts forecast annual growth of silver consumption in the country by two-thirds, the indicator may reach 6 000 tons.
Precious metals market participants consider silver to be the most appealing asset for investment. Over the last few years, silver has significantly lagged behind gold, and their ratio, even after a decline in recent weeks, remains well above the historical average level of 70. This means that silver has the greatest potential for further price growth.
Based on the signals of technical indicators, the silver correction does not look complete yet. The price may continue to decline to the range of 27.75–28, where buying looks more reasonable. After resumption of growth, the nearest target will be the local high of 29.8.
The following trading strategy may be offered:
Buy silver when the price drops into the range of 27.75–28. Take profit – 29.8. Stop-loss – 27.1.
This content is for informational purposes only and is not intended to be investing advice.
