Silver prices are showing moderate growth on Monday, rising by 0.86% after a two-week decline. The main factor behind the recovery is a weaker dollar, which earlier reached a two-year-high due to Donald Trump’s victory in the US presidential election.
Investors are focused on the prospects of the Federal Reserve System‘s monetary policy. Despite the inflation risks associated with Trump’s economic plan, traders continue to price in the probability of an interest rate cut in December. Lower borrowing costs make silver a more attractive asset.
According to the Commodity Futures Trading Commission, silver speculative net positions dropped to 47.6K. However, fundamental factors remain favorable, with geopolitical instability supporting the demand for safe-haven assets.
Nevertheless, lower demand for silver as an industrial commodity is limiting the price recovery. The lack of new economic stimulus from China supports the view that the surplus of solar panels will continue to put pressure on the market. Chinese solar panel manufacturers have started to reduce production volumes due to the increasing probability of tariff hikes targeting the sector under the new US administration.
Silver prices have been maintaining a 27.66% growth since the beginning of the year, confirming their stability amid market volatility. This week, market participants’ attention will be focused on the Fed representatives’ speeches, which may clarify further prospects of monetary policy.
From the technical point of view, silver prices are forming an upward trend on the D1 timeframe. On H4, the price broke through the downtrend line, indicating a possible trend change on the current timeframe and the preservation of the ascending channel on the higher timeframe. The Bulls Power indicator (default values), which is in the positive zone on H4, confirms the strength of the bullish sentiment.
Signal:
The short-term outlook for silver suggests buying.
The target is at the level of 32.900.
Part of the profit should be taken near the level of 31.500.
A stop-loss could be placed at the level of 29.200.
The bullish trend is short-term, so a trading volume should not exceed 2% of your balance.
