The silver price has gradually stabilized after Monday's fall. Quotes found a good support at the level of 27, as drawdowns below this mark are successfully bought back. The correction helped to rid the technical indicators of the overbought condition, and soon the market participants will be ready for a new wave of growth. It’s too early to speak about returning to the level of annual highs, but the mark of 28.2 is definitely within the reach of the bulls.
Analysts at Heraeus consider the current market of precious metals’ correction quite fair, but at the same time they expect stronger dynamics from silver, but not from gold. As for the white metal, the experts predict only a moderate pullback in prices. As gold is too expensive now, buyers are paying more attention to silver. This trend is especially noticeable in India, where a sharp increase in imports and demand for the white metal is seen in 2024.
India accounts for 47% of global silver consumption. Heraeus estimates that strong economic growth in the country and an expanding middle class will be important drivers of increased demand for the white metal. In terms of price growth rate, silver could yield to gold only due to sharp geopolitical tensions. The high price of the metal will be supported by the growth of its consumption in industry, as well as by problems with mining.
Peter Krauth of Silver Stock Investor notes that silver production peaked in 2016. Since then, it has been declining or flat, with no return to the highs expected in the coming years. This is primarily due to the investment policies of mining companies, which are trying to save money. They tend to expand mines and their life rather than launch new projects. Under such conditions, the deficit in the global silver market will only worsen.
The RSI indicator on the daily chart of silver has left the overbought zone and is signaling that the price could rise again. The nearest target for buyers is the level of 28.2.
The following trading strategy can be suggested:
Buy silver not lower than the level of 27. Take profit — 28.2. Stop loss — 26.3.
This content is for informational purposes only and is not intended to be investing advice.
