The price of silver has suffered a sharp reversal. It fell from $34.86 to $34.47 last Friday, down from $34.86 in October. The price is still higher than the pandemic-low of $13.80 and is only a few points lower than its highest level for a decade.
SLV ETF inflows rise
Silver fell as investors continued to move into the iShares Silver Fund (SLV), a popular investment fund with assets of over $15.76 Billion.
ETF.com data shows that net inflows to the fund which tracks silver have been $1.3 billion for this year. The trend continued in October, when the fund added $398 millions. This was higher than its previous month’s $113million.
As the gold/silver rate remained at a high level of consolidation, more money was injected into the fund. The fund was trading at $84 where it had been for the last few months. This ratio is the amount of silver equivalent to an ounce of gold.
Silver inflows are rising as long as it maintains a healthy mix of fundamentals and technicals.
It is a reaction to the investments made in solar energy and other clean energies. Silver is a metal that’s used in the manufacture of solar panels and many other items.
However, the manufacturing sector in the world is still under pressure. The PMI numbers in countries such as the United States and China remain in the contraction zone. The IMF has recently downgraded its outlook for global GDP, citing a weakening of the Chinese economy and the possibility of a Trump administration.
Silver’s two catalysts are ahead
This week, silver and the SLV ETF are likely to be impacted by two major catalysts. The Federal Reserve will announce its interest rate decision Wednesday. Analysts predict that the bank is likely to cut rates by 0.25 percent at this meeting. This will be the second time in a row the bank has done so.
In the last meeting, it slashed interest rates by an incredible 0.50% as a result of its concern about the deteriorating labor market.
The jobs figures for last Friday showed that the economy is not doing well, as only 12,000 new jobs were created.
The Fed is encouraged that inflation is moving towards 2%. Last month, data released showed that both the headline consumer price (CPI), and personal consumption expenditures (PCE), had declined to 2,4% and 2,2% respectively.
When the Federal Reserve is dovish, silver, like gold, attracts risk-taking investors.
Another key factor for the price of silver will be the US elections, where Donald Trump and Kamalah Harris will face off. The polls are close, so it’s hard to tell who will win. The presidential winner has a major impact on silver, among other assets.
Silver Price Analysis
Silver chart by TradingView
Silver’s price rose to $34.86, but then experienced a sharp reversal to move to $32.47. This level was notable because it was the year-to date high and formed a double top pattern.
Silver has formed an infamous break-and-retest pattern. This is a common sign of a continuation. The price remains above the moving average of 50 weeks, indicating that bulls remain in control.
Silver will therefore likely resume its uptrend. The next level to monitor is $34.87. If the bulls break through that level, it will confirm a bullish breakout. This will lead to further gains as they target the $40 key resistance level.
Silver could also retest the next psychological level of $30. This would be its biggest swing since Feb. 1, 2020.
This post Silver forms a bullish trend as SLV ETF flows rise may be updated as new information becomes available
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