Since reaching recent all-time highs, gold has outpaced silver, and despite a favorable risk asset environment, recent price action in silver has yet to validate a decisive upward move.
It's crucial to recognize that silver holds significant industrial applications, establishing a notable correlation with metals like copper and zinc. As these metals are considered forward-looking due to their integral role in various industries, their increased demand is often indicative of growing economic activity, positioning them as leading indicators.
Economic Headwinds and Fundamental Challenges:
The recent revision of the Atlanta Fed GDPNow estimates for Q4, were lowered from 1.8% to 1.2%, reflecting weaker economic growth expectations. Concurrently, weaknesses in the labor market have shifted interest rate expectations, now pricing in a potential cut as early as March 2024.
While easier financial conditions typically boost silver prices as investors seek risk assets, concerns arise regarding demand in the industrial sector, heavily influenced by the business cycle.
Can We Break Out?
Silver, with characteristics of both a precious and industrial metal, requires more robust fundamentals than gold. Upcoming unemployment rate and Nonfarm payrolls reports will offer insights into the labor market, with further weakness likely leading to lower rates and supporting silver. However, industrial sector strength in China and the U.S. is equally imperative.
The Technical Picture:
From a technical standpoint, the 21-Day EMA serves as a near-term support, while 26.25-26.75 presents substantial overhead resistance. A breakthrough and close above this level are essential to retest the $28 mark.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
It's crucial to recognize that silver holds significant industrial applications, establishing a notable correlation with metals like copper and zinc. As these metals are considered forward-looking due to their integral role in various industries, their increased demand is often indicative of growing economic activity, positioning them as leading indicators.
Economic Headwinds and Fundamental Challenges:
The recent revision of the Atlanta Fed GDPNow estimates for Q4, were lowered from 1.8% to 1.2%, reflecting weaker economic growth expectations. Concurrently, weaknesses in the labor market have shifted interest rate expectations, now pricing in a potential cut as early as March 2024.
While easier financial conditions typically boost silver prices as investors seek risk assets, concerns arise regarding demand in the industrial sector, heavily influenced by the business cycle.
Can We Break Out?
Silver, with characteristics of both a precious and industrial metal, requires more robust fundamentals than gold. Upcoming unemployment rate and Nonfarm payrolls reports will offer insights into the labor market, with further weakness likely leading to lower rates and supporting silver. However, industrial sector strength in China and the U.S. is equally imperative.
The Technical Picture:
From a technical standpoint, the 21-Day EMA serves as a near-term support, while 26.25-26.75 presents substantial overhead resistance. A breakthrough and close above this level are essential to retest the $28 mark.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
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