Silver prices, as well as most other metals, ended last week with the strongest decline since the beginning of 2024. The level of $30 per ounce was broken, but at the mark of 29 buyers of the white metal still managed to stop the downward momentum. The price decline of almost 7% in just one trading session looks clearly excessive, especially given the continuing fundamental positivity in the silver market. Having seized the initiative, the bulls will immediately try to return the price above the level of 30.
Baseline analysts note some worsening of traders' sentiments on financial markets. Strong report on the US labor market for May together with ambiguous statistics on the trade balance of China put pressure on the value of many assets. Nevertheless, Baseline experts do not expect a significant deepening of the correction in silver prices. According to their estimates, the short-term trading range for white metal prices is $29.8–30.8 per ounce.
UBS strategists give an even more optimistic forecast for silver prices. In its new report, the Swiss investment bank indicates the expected silver price at the end of 2024 at $36 and the average annual price at $30.5. That's 20% and 14% higher, respectively, than previous forecasts. UBS representatives noted a sharp increase in industrial demand for silver, especially from the solar panel manufacturing sector. This sector accounted for more than 40% of silver consumption in 2023.
Chen Lin, founder of Lin Asset Management, sees diversion of supplies from Western countries to Asia as the main driver of growth in the value of the white metal. According to his data, silver stocks at the Shanghai Exchange fell to a 10-year low. At the same time, investment demand for the precious metal in China has recently increased sharply: the premium to the price of silver in Shanghai compared to global rates has reached 10%.
The support at 29 has held, increasing the chances of a strong upward bounce in silver. Its nearest target should be at 30.
Consider the following trading strategy:
Buy silver in the range of 29–29.5. Take profit – 30. Stop loss – 28.3.
This content is for informational purposes only and is not intended to be investing advice.
