Silver has not moved anywhere in the last two months as the metal has hit a solid resistance near $24.50, and investors took profits from the massive rally, which brought the metal from $18 in October to $24.50 in December. That was a 35% gain in two months.
After heavy selling pressure, the US dollar looks to have gained support, likely halting silver’s potential for further gains. The greenback stopped its decline near 102 points, its lowest level in seven months. So far, that level is holding. However, silver might start rallying again if the dollar index drops below it.
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Moving forward, silver traders will pay special attention to the volatility event ahead of the US Q4 GDP, as a mostly industrial metal is threatened by recession concerns. However, next week’s Federal Open Market Committee (FOMC) meeting will be analyzed critically for direction.
Nonetheless, the absence of Chinese traders and the pre-Fed blackout period appear to be weighing on the silver price recently as a result of the Lunar New Year vacations in China.
Consensus is still bullish
Many analysts anticipate that silvers’ price will keep rising in the foreseeable future, which has led to the metal’s near-term top. Commerzbank commodity researchers predict that the silver market will surpass $25 per ounce by the end of the year due to investor and manufacturing demand.
They also think industrial demand should continue to benefit from electrification of the vehicle fleet, 5G technology, and the government-driven rollout of green infrastructure such as photovoltaics. In addition, physical investment demand should be buoyed unabated by fears of high inflation.
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Analysts at the European precious metals company Umicore noted silver’s underwhelming performance in comparison to gold and copper. After outperforming gold in November and December, the price of silver is currently hovering around $24 per ounce. Silver’s lack of momentum is also in stark contrast to other industrial metals, such as copper, which just reached its highest level in seven months.
Silver trades within a consolidation formation
A sideways movement has characterized the previous six weeks as silver consolidated after its big rally. The key levels to watch are $24.50 or $23. When the metal closes above the first or below the latter, it might start another meaningful momentum in that direction.
Silver 1D chart, source: tradingview.com, author’s analysis