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‘Indicators Flash Green’ For Silver Price Despite Recent Dip
After hitting a seven-year high last night at $26.21, with a 24.3% gain in five sessions amid a new all-time high for gold, the price of silver is losing ground, down 3.2% to $23.81.
Still, analysts believe that the bullish trend in the price of silver remains in place. “From a technical perspective, all major silver indicators are flashing green and combined with an Average Directional Movement Index (ADX),” said Monte Safieddine, Dubai-based market analyst at IG.
‘However […] the big picture (as with gold) has been described as volatile. This means conformist technical insight strategies are all about expecting key levels to break and not hold as market makers withdraw liquidity fearing they will be caught on the opposite side of a fierce move. “, he warns.
Despite the significant volatility that the precious metals market is currently experiencing, the price of silver should maintain its upward trend over the next few months, as more expansionary fiscal and monetary policies will keep real yields very low.
Precious metals expect to benefit in times of uncertainty
According to Christopher Vecchio, senior strategist at Daily FX, “an environment [of] decline in real yields […] historically has been beneficial for precious metals like silver prices.
“This context seems to be strengthening: short-term rates are close to zero while growth and inflation rates are increasing in the developed economies of Asia, Europe and South America,” he said. he explained in an analysis published last week.
Christopher Vecchio also pointed out that in these times of uncertainty, “while other asset classes don’t like increased volatility (signalling greater uncertainty around cash flow, dividends, coupon payments , etc.), precious metals tend to benefit from periods of higher volatility.” while uncertainty increases the attractiveness of silver as a safe haven.
What about the opinions that the price of silver could plateau before the end of the year?
While the majority of analysts share bullish sentiment on silver over the long term, some expect the price of silver to decline before the end of the year.
“We expect prices to rise in August and then plateau or decline a little during the September to November period, with higher prices next year,” CPM Group managing partner Jeffrey Christian told Investing News Network. last week.
As industrial demand for silver has been somewhat slower than silver mine production to recover, “there is some downward trend weighing on the physical silver market,” a- he declared.
The Silver Institute is more optimistic; director Michael DiRienzo anticipates a return to industrial demand this year. ‘As economies restart […] the need for industrial metal silver and gold will be even greater”.
Citi analysts expect gold/silver ratio to fall to 70:1
Therefore, DiRienzo considers that the price of silver will rise and continue to narrow its gap with the price of gold at the end of 2020.
Citi analysts share the same position, predicting that the gold/silver ratio will fall to 70:1 in six to twelve months.
The gold/silver ratio is around 80 today as the price of silver is trading below $24 and the price of gold is at $1935 per ounce.
After a sharp drop in March, when the gold/silver ratio exceeded 126:1, the white metal rebounded in April. It has accelerated its rise over the past four weeks, rising more than 24%, faster than the price of gold, which rose 9% over this period.
How to Trade Commodities with IG
Looking to trade silver and other commodities? Open a real or demo account with IG and buy (long) or sell (short) stocks using derivatives like CFDs in a few simple steps:
- Create an IG trading account or login to your existing account
- Enter ‘Copper’ in the search bar and select it
- Choose your stance size
- Click on ‘buy’ or ‘sell’ in the transaction ticket
- Confirm exchange
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