Last week, silver prices continued their rebound from 3-month lows, returning to the level above 27.8. After that, silver prices broke through the 50-day moving average and are now trying to consolidate above the level of 29. At the same time, silver prices growth has not yet been accompanied by technical indicators moving into an overbought zone. Therefore, the upward movement may well continue, and the next bullish target will be the level of 30.
Silver, as well as other precious metals, strengthens due to forecasts of a soon US Fed rate cut. These expectations may intensify by the end of the current week, when a conference of global central banks in Jackson Hole will be held. Against this backdrop, gold prices have already hit an all-time high, while silver remains lagging behind. Scott Bauer, CEO of Prosper Trading Company, considers this to be a sign of an imminent rally in the silver market. As long as the gold/silver ratio does not return below the level of 80, silver will have the advantage.
ByteTree analysts led by Charlie Morris are also positive about silver prospects. In their opinion, the advent of a new generation of batteries will cause a sharp increase in silver demand. This metal is critical for extending the distance electric cars can travel. At the same time, silver prices are still far from all-time highs, so there are no fears that battery manufacturers will try to replace silver with cheaper analogs.
Meanwhile, silver supply in the world market may soon decrease significantly. Mexican authorities have introduced a bill in Congress of the Union to ban open-pit mining. The Mexican Mining Chamber is against the ban. According to its estimates, the adoption of the law will lead to a 1% reduction in the country’s GDP and will jeopardize about 200 thousand jobs. Mexico is the world’s largest silver producer.
The RSI indicator on the daily silver chart indicates that the price will continue to grow. In case of favorable news from Jackson Hole, prices will reach the level of 30 in the next few days.
The following trading strategy can be suggested:
Buy silver at the current price. Take profit – 30. Stop loss – 27.8.
