Silver prices ended the last week with strong multidirectional movements. Thursday's impulsive growth was completely offset on Friday, bringing the price back to the middle of the range of 29–30. At the same time, the price continues to remain above the support levels of 28.7–29, corresponding to the highs of April and the lows of June. At these marks, buyers are inclined to set long positions, expecting a new wave of growth in silver prices.
Friday's pullback in silver prices was caused by the publication of business activity indices in the US. PMI values in both industry and service sector exceeded analysts' expectations. This led to the strengthening of the dollar, and silver and other commodities were under selling pressure. Nevertheless, traders didn’t significantly change their forecasts and continued to bet on the first Fed’s key rate cut to happen in September. In this regard, almost 4% drawdown in silver prices should be at least partially bought back.
The experts of Bank of America urge traders to build up long positions on the white metal below the level of $30 per ounce. Michael Widmer, Head of Commodities Research, expects silver prices to rise to $35 within the next 2 years. According to Widmer, the white metal will soon be supported by the recovery of the global economy and the growing use of solar panels, the production of which requires more and more silver.
Silver market analyst Christopher Aaron gives an even more optimistic forecast, according to which the prices will reach almost $48 per ounce by the end of September. In his opinion, the sharp decline in the ratio of gold to silver, which began in the spring, signals a great chance for the rise in silver. There have been only 5 such instances in the past 20 years, and on average silver has appreciated 69% per quarter after each such signal.
At Monday's trading session, the bulls have already started to recover their positions in the silver market. Their nearest target will be the round mark of 30.
The following trading strategy can be suggested:
Buy silver in the range of 29.2–29.6. Take profit — 30. Stop loss — 28.7.
This content is for informational purposes only and is not intended to be investing advice.
