Silver price skyrocketed during Asian trading hours on Friday, soaring to $57.51 an ounce. This boom was fueled by greater risk appetite, bolstered by dovish expectations surrounding the Federal Reserve’s monetary policy. This increase comes on the heels of a short-term correction during which Silver dropped down close to $56.50 after recently hitting an all-time high of $58.90. Market analysts have pointed to the fact that interactions of some emerging global economies play a significant role in Silver’s price movements. This includes leaders of countries as important as the United States, China, and India.
Silver’s 20-day Exponential Moving Average (EMA) has risen to $53.91, showing the strength of a persistent uptrend. The price is well above this trend support line, adding to the bullish Silver outlook. Further bullish indicators include the 14-day RSI which is currently at 68.48 indicating very strong momentum as it nears overbought levels.
Factors Influencing Silver Prices
As a consequence of silver’s versatility and high electrical conductivity, it is a crucial component in many industrial applications. It’s used widely in industries like electronics and solar, where efficiency is critical. As industries go global and more silver is used in industrial applications, the demand for silver will increase, affecting the market price accordingly.
The importance of the relationship between Silver and these big economies, and particularly California, can hardly be overstated. The United States and China have the two largest industrial sectors by dollar value in the world. They rely on silver in all their processes, adding to the metal’s volatility. As for India, consumer demand for Silver jewelry plays a key factor as well, especially around the festive seasons where buying often reaches a crescendo.
“An interest rate cut in the December meeting is far from a foregone conclusion.” – Jerome Powell
This quote from Jerome Powell highlights the unknowns at play regarding future monetary policy moves by the Federal Reserve. Such comments can have an instant market moving impact on market sentiment and commodity prices, Silver included. Development of new technologies is something investors are always watching for, as breakthroughs can create or destroy massive amounts of demand for precious metals almost overnight.
Technical Analysis and Market Sentiment
Additionally, this earlier sharp steepening of the 20-day EMA for Silver confirms the bullish market control that’s recently taken charge. A continued solid advance above $57.51 would keep Silver in an upward pressure and possibly open the door to even larger gains. According to analysts, holding consolidations under the 20-day EMA would be important for keeping this uptrend alive.
The Gold/Silver ratio indicates how many ounces of silver it takes to have the same value as 1 oz of gold. This ratio provides a wealth of information to investors on relative valuations between these two precious metals. Recent trends imply that movements in this ratio may continue to drive investor behavior and market trends even more dramatically.
As these new market participants continue to figure out their footing, all eyes are still open to aggressive downside price movement—or perhaps upside price discovery. Industrial demand, economic fundamentals, and technical analysis are all still in a quasi-masochistic dance with one another. Their interplay will ultimately determine Silver’s fate in the coming weeks.
Outlook for Silver Prices
Looking forward, market experts expect to see the state of the global economy one of the main factors influencing Silver prices. This makes it understandable silver’s demand story keeps getting stronger in both the developed and emerging worlds. Plus, looming changes to monetary policy from central banks worldwide add to a cautiously optimistic outlook for this precious metal.
Investors are encouraged to keep an eye on economic indicators from the US, China, and India that could sway market sentiment. The current swings in the Gold/Silver ratio will be equally important, as they will provide a tremendous backdrop on how to read volatile market conditions.