Silver price movements in recent months have largely been due to its status as a precious metal. The ongoing slowdown in industrial activity is weighing on its demand. Metals Focus’ forecast of $27.30 appears to be far from reach.
Silver’s industrial demand
While silver’s status as a precious metal currently overrides that of its industrial position, the latter is still an influential factor in its price movements. Silver Institute predicted that the metal’s demand will rise by 8% YoY after declining by 5% in the previous year.
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Besides, Metals Focus has been highly bullish about the commodity. Earlier in the year, it forecasted that silver price will average at $27.30 in the current year and may even surge further to $32.
Based on the observed decline in industrial activity, the predicted levels appear far from reach but not impossible. On Friday, US preliminary manufacturing PMI data came in lower than expected at 59.2.
Additionally, Citigroup Inc. and Bank of America have warned that the Chinese economy will likely record further slowdown as it strives to lessen its reliance on the real estate sector. That, coupled with the ongoing energy crisis and coronavirus pandemic will have a significant impact on the Middle Kingdom. With the country being the largest consumer of silver and other industrial metals, investors are keen on the progress of its industrial demand in the year’s final quarter.
Silver price technical outlook
Silver price is holding steady above the crucial resistance-turn-support level of 24 after the bulls successfully pushed it past the zone about a week ago. Notably, that zone had been evasive since early-September.
On Friday, it hit a 6-week high of 24.83 before pulling back to below the resistance level of 24.50. At the time of writing, the precious metal was up by 0.3% at 24.39.
On a four-hour chart, silver price is trading above the 25 and 50-day exponential moving averages. Besides, the formation of the bullish cup-and-handle pattern hints at further gains.
In the near term, I expect the precious metal to continue finding resistance at 24.50. Additional bullish momentum will place the resistance level at September’s high of 24.86. While the psychological level of 25 appears attainable within the year’s last quarter, it will likely remain evasive in the short term as the position of silver as a precious metal outweighs its industrial status. On the flip side, a move below 24 may place the support level along the 50-day EMA at 23.81.
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The post Silver price outlook: is the bullish industrial demand outlook still valid? appeared first on d0llars.
source https://d0llars.com/silver-price-outlook-is-the-bullish-industrial-demand-outlook-still-valid/
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