Silver consolidates as investor concerns over stagflation persist

Traders Union
All News
Commodities
Silver gains 0.51% today to $66.52

Highlights

Silver ETF inflows surged by 187 million ounces as investors seek protection amid stagflation fears and rising geopolitical risks.
Physical silver investment demand is projected to rise 20% in 2024, reaching a three-year high of 227 million ounces and tightening supply.
Technical signals show short-to-medium term bullish momentum, with silver expected to trade between $64.58 and $68.46 next session and a strong probability of an upside breakout.

ETF inflows and supply fears drive investor demand for silver

Exchange-traded fund inflows have increased by 187 million ounces, reflecting a significant shift in investor positioning due to concerns about stagflation, US monetary policy, and geopolitical risks, according to Financefeeds. This surge in ETF holdings directly boosts financial demand for silver, creating additional support for spot and derivative prices. In parallel, Financefeeds notes that physical investment demand is set to climb by 20% to a three-year high of 227 million ounces, tightening silver's supply and amplifying its appeal among investors.

Overbought signals contrast with strong technical support

On the technical front, XAG trades above its MA-20 ($65.62) and MA-50 ($65.48) but remains below the longer-term MA-200 ($76.39), with the Ichimoku Kijun at $65.53 acting as immediate support. Key momentum indicators (MACD, ADX, RSI, CCI) are in Buy territory, while Stoch RSI signals a strong Sell, and BBP highlights overbought buyer dominance; the Awesome Oscillator is neutral. This divergence suggests upward momentum is supported but warns of a possible short-term reversal if overbought signals intensify.

Sideways trend likely as breakout risks remain elevated

In the short term, silver is expected to trade within a volatility band of $64.58 to $68.46. There is a 65% probability of an upward move, with a less likely downside scenario. A bullish breakout above $68.46 could trigger renewed upside, while a fall below $64.58 may lead to increased selling pressure. The baseline forecast is for continued sideways movement within this established range.

Anton Kharitonov, expert at Traders Union, sees demand growth as a key driver for recent silver strength. He believes rising ETF flows and physical investment indicate persistent investor concerns, but technicals reflect an overbought market with risk of reversal. Base case is for range trading unless momentum clears $68.46. "Until silver breaks out from $68.46, I remain cautious and expect choppy, sideways price action."

Previously it was reported that ongoing supply concerns and heightened geopolitical risks were weighing on the outlook for silver. The current surge in both ETF inflows and physical investment demand reinforces the bullish case, making a sustained move above $68.46 the key near-term catalyst for further upside momentum.

Source of Data: XAG Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.