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Technical and fundamental analysis for Silver – June 2022

Published by Karl Martin Karus in category Uncategorized on 02.06.2022
Gold price (XAU-SEK)
20887,10 SEK/oz
  
- 117,40 SEK
Silver price (XAG-SEK)
232,28 SEK/oz
  
- 4,54 SEK

Fundamental Analysis

Hedge funds remain bearish on silver

According to Kitco, a report showed that money-managed speculative gross long positions in Comex silver futures rose by 736 contracts to 41,545. However, short positions also rose by 1,922 contracts to 42,404.

Silver now has a net short position of 859 contracts. For the sixth week in a row, net bullish positioning has decreased. Since early June 2019, the silver market has been a net negative for the first time.

Analysts suggest that copper needs to stabilize before silver can find a bottom

The silver market is struggling, according to analysts, since sluggish demand for base metals has a negative influence on its industrial interest.

According to some experts, copper prices must stabilize before silver can find a bottom. As hedge funds closed their hefty copper short bets, this situation might be on the cards shortly.

Silver correlates with Energy Transition Equities


(Picture 1. Source: Bloomberg and Sprott Asset Management LP. Data as of 4/30/2022.)

Although risk aversion is prevalent in the current climate, it is not the fundamental driver of longer-term silver demand, given its dual character as a precious and industrial metal.

The energy transformation narrative will potentially be a significant driver of silver demand this year and in the future. Both the epidemic and the war in Ukraine have increased investment in energy-transition projects. The current environment’s geopolitical difficulties only bolster that tendency while weakening other aspects of silver demand.

Technical indicator analysis

Trendlines / Support & Resistance

*Red lines are downtrend. The heavy red line is the long-term trendline.
*
Green lines are uptrend. The heavy green line is a long-term trendline.
*
Blue lines are short term support & resistance lines

(Picture 2. Trendlines & Support/Resistance)
You can check more interactive graphs from our Tradingview account.

  • Silver has had strong bearish pressure.
  • Silver broke under a strong support line of 21.5 USD per ounce but quickly pushed back above the line and currently trading very near that area, but still above. The short-term break under the support line was probably a fakeout.
  • Another bearish indicator is that the silver price is trading strongly below 250MA.
  • If the silver price breaks the 21.5 USD support area again, we can expect a steeper bearish movement.

 

The Gartley pattern, Moving Averages, and RSI


(Picture 3. – Garterly pattern, moving averages, and RSI)

  • Similarly, the Gartley pattern has formed in the silver graph like gold.
  • This Gartley pattern is called the “Bat pattern, ” indicating a bullish movement. If a bullish move happens, the price probably spikes near the 250MA area.
  • A slight divergence between the RSI indicator and the price chart indicated the price movement back above 21.5 USD.
  • Silver can be volatile in the following months because of solid bearish sentiment.
  • On the other hand, some strong fundamentals support a potential silver price increase.

In conclusion, there are “mixed feelings” in the market, and one must keep an eye on price action and near-coming support areas to make educated price speculation.


Disclaimer: This article is for informational purposes only and is not intended as an investment analysis or recommendation to sell or buy commodities. Tavex is not responsible for any decisions made based on this information. Investing is associated with opportunities and risks, and the market value of commodities can both increase and decrease. Past or future yields on the commodities and financial ratios shown above do not represent a promise or an indication of future earnings

Gold price (XAU-SEK)
20887,10 SEK/oz
  
- 117,40 SEK
Silver price (XAG-SEK)
232,28 SEK/oz
  
- 4,54 SEK

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