Loss of trader interest could send silver prices down to 34.6

Last week silver prices set a new high since 2012, but then the buyers started to take profits. The price switched to a correction and is now trying to stabilize near the level of $36 per ounce. However, this mark is not a serious technical obstacle for the bears, they likely target the levels of 35.5 and 34.6. The whole precious metals market is currently under pressure.

Many traders expected a surge in prices of safe-haven assets after the United States' direct intervention in the Middle East conflict. However, at the start of Monday's trading session, there were no signs of increased demand for gold and silver. Analysts at GoldPriceForecast consider it a clear sign of short-term waning interest in these assets, which have already significantly appreciated in price over the past few weeks.

Experts also paid attention to the recent growth momentum in platinum prices. Probably, investors have no longer seen a great potential for gold and silver appreciation, so they decided to switch to other metals. Moreover, there is a noticeable resurgence in dollar demand, as the currency rebounds from a 3-year low. The strengthening US dollar is negative for all commodities, including silver.

According to GoldPriceForecast, one more sign of the rally's end is seen in the dynamics of trading volumes. Local tops on the silver and platinum charts corresponded to the highest trader activity, after which the volumes of transactions went down. On Friday half of the drawdown was bought back by the end of the day, but without significant increase in the number of the bulls. In other words, investors do not consider the current prices for silver and other precious metals attractive for opening new long positions.

If silver prices fail to consolidate above the level of 36, the downward movement may accelerate. In this case, the benchmarks for profit taking on short positions may be 35.5 and 34.6. The RSI confirms the priority of selling.

Consider the following trading strategy:

Selling silver near the 36 level. Take profit 1 — 35.5. Take profit 2 — 34.6. Stop loss — 36.7.