Silver to retest upper boundary of sideways trend at 33.7

Silver spent three weeks of May under pressure from the downtrend, yet by the end of last month it managed to break to higher levels. In recent days, price movement has stabilized within the sideways trend with boundaries at 32.7 and 33.7. A consolidation above or below these levels could significantly boost silver prices. The technical picture is neutral, and fundamental factors suggest more upside prospects. 

US President’s import levies remain in the spotlight of financial markets. Last week, the legality of Donald Trump’s tariffs was questioned, and the proceedings are set to continue in US courts. Trump clearly has no intention to back down, and he confirmed that by announcing the plans to double steel and aluminum tariffs to 50%. This decision is weighing on the dollar while boosting demand for silver and other precious metals. 

Analysts at Bank of America Securities, led by Francisco Blanch, stick to a $40 an ounce target for silver in 2025. They believe the trade war situation will resolve in one or two quarters, which will be followed by accelerating global economic growth. The gray metal could be among the main beneficiaries of this process due to its active use in industry. 

Blanch expects investment to increase further in solar power and electrification. It will require a huge amount of silver. At the same time, the gray metal’s prices have not been rising as fast as those of gold. Hence, companies now have no reason to actively seek cheap alternatives of silver. The metal’s upside potential is even more impressive if one looks at 2011’s all-time high of nearly $50 an ounce.

The RSI at the daily chart of silver has stabilized at the average levels and is not limiting price growth to 33.7.

Consider the following trading strategy:

Buy silver at the current price. Take profit – 33.7. Stop loss – 32.7.