Silver may decline to $32.700 on stabilizing US–EU trade relations

Silver closed last week with a gain, overcoming the $33 per ounce mark. The rise in price was due to an increase in demand for safe haven assets caused by growing concerns about the US budget. Such dynamics boosted the investment appeal of precious metals as a reliable means of securing capital. On Monday, the trade started at the level of $33.42 per ounce.

Silver prices were influenced by fears regarding the US budget deficit and increasing national debt, spurred by the recent adoption of President Trump's new budget bill. The measures have increased investor concerns about the country's long-term financial stability, thus supporting demand for precious metals. 

The postponement of the introduction of duties on imports from the EU was also an important event that influenced the dynamics of silver prices. This move caused a temporary easing of trade tensions, weighing on safe haven assets, including gold and silver. Silver, while less liquid than gold, remains sensitive to changes in market conditions. The temporary stabilization of trade relations between the US and the EU may reduce speculative interest in silver, but industrial demand, particularly in the renewable energy sector, continues to play a crucial role.

Industrial demand for silver is still holding the key to its momentum. According to fresh data, solar and wind power capacity in China rose to nearly 1,500 GW in the first quarter, driven by a 60 GW increase in photovoltaic panel installations. This had a positive impact on the demand outlook for silver, as it is widely used in solar panel production. 

Technical analysis shows that silver is moving within a channel between $31.600 and $33.800, with the price remaining above the exponential moving averages (EMA 20 and EMA 50). The RSI indicator is at 58, indicating a slight slowdown in the upward momentum. Approaching the upper boundary of the channel may trigger a price pullback towards its midsection.

Current recommendation:

As part of a short-term strategy, selling at the current price may be considered. Take profit – $32.700. Stop loss – $33.690.