The silver market has been quiet in the early hours of Wednesday. It continues to trade within a familiar range that has persisted for several weeks. Silver has been consolidating between $32 at the lower end and $34 at the upper end for a considerable period.
Previously, the market experienced a steep decline to $28 before recovering sharply to the $34 level. This behavior suggests a phase of normalization after a period of high volatility. This has caused a temporary erosion of confidence among traders.
Despite the short-term fluctuations, silver’s overall trend remains bullish. In a broader context, the market has witnessed significant moves over the last four years. These moves were characterized by substantial increases, corrections, and subsequent rebounds within a defined range.
For investors looking for opportunities, short-term pullbacks might present the best entry points. Should silver achieve a daily close above $34, it is likely to target $35.50 and potentially higher levels. Conversely, a drop below $32 would prompt scrutiny of the 200-day EMA’s support level.
For now, the market remains a playground for short-term traders who exploit the well-defined consolidation range. However, a big move may be on the horizon. Chris is a proprietary trader with over 20 years of experience spanning various markets, including currencies, indices, and commodities.
He provides advanced market perspectives to help readers navigate today’s financial landscape. Silver’s appeal as an investment is waning as the prices of precious metals, including gold and silver, enter a narrowing wedge pattern, according to traders. Market analysts suggest that this trend may indicate a period of stagnation or potential decline for silver.
Silver has traditionally been seen as a safe-haven asset. This shift is reflective of broader market dynamics and investor sentiment. The narrowing wedge pattern typically signals a potential breakout or breakdown in prices.
This creates a state of uncertainty among investors. As a result, many are reconsidering their positions in silver. Several factors are influencing these market movements, including the recent trends in gold prices, which have shown both volatility and potential for growth.
Despite some fluctuations, gold continues to be viewed as a stronger investment relative to silver. This sentiment has been echoed by various market experts who have pointed to several macroeconomic indicators and geopolitical developments that are contributing to this trend. For instance, the recent thawing of U.S.-China trade relations has had notable impacts on gold prices.
While gold saw a dip in prices amid improving trade relations, it also demonstrated resilience compared to silver. Analysts argue that ongoing uncertainties in global markets, paired with economic policies and geopolitical tensions, will continue to play pivotal roles in shaping the outlook for precious metals. As these developments continue to unfold, investors are advised to stay informed and cautiously evaluate their investment strategies.
Silver’s bull case amidst volatility
While silver may still have potential, its performance in the near term is likely to be overshadowed by the dynamics affecting gold and other precious metals. Ernest Hoffman, a seasoned market reporter, emphasizes the importance of staying updated on economic news and market trends.
With over 15 years of experience in the field, Hoffman suggests that understanding these patterns is crucial for making informed investment decisions. Silver prices continued their rally on Wednesday, buoyed by a weakening U.S. dollar and renewed fiscal anxieties in Washington. Trading decisively above its 50-day moving average, silver’s momentum has turned positive.
Traders are closely watching resistance levels at $33.25 and $33.70. A breach of these levels could pave the way to a higher target zone between $34.59 and $34.87. At 11:58 GMT, silver is trading at $33.09, unchanged.
The greenback’s two-week decline has significantly bolstered silver’s recent rise. Moody’s downgrade of U.S. credit last Friday triggered fresh selling of the dollar. Moody’s cited ballooning deficits from recent fiscal policies.
This has enhanced the appeal of dollar-denominated assets like silver to foreign buyers. The dollar index (.DXY) has fallen across the board, declining against both the yen and the Swiss franc. Currency traders are now monitoring U.S.-Japan finance discussions closely, especially with Treasury Secretary Scott Bessent scheduled to meet his Japanese counterpart.
Any signals promoting a weaker dollar could further lift silver prices, particularly as gold approaches breakout levels. Gold is often a bellwether for precious metals. Treasury markets continue to reflect concerns over U.S. fiscal health, with the 30-year yield surpassing 5% and the 10-year yield climbing to 4.5% on Wednesday.
These moves come amid growing expectations that fiscal policies could balloon the deficit significantly. Deutsche Bank analysts highlighted the tax bill’s final shape as crucial to near-term debt expectations. Ray Dalio of Bridgewater Associates warned of inflation risks should the Federal Reserve resort to money printing to manage debt.
Consequently, investors are increasingly turning to inflation-hedging assets like silver and gold. Technically, silver has broken above the 50-day moving average at $32.80, now acting as key support. The longer-term direction is governed by the 200-day moving average at $31.39.
With prices now targeting resistance at $33.25 and $33.70, traders are vigilant for a potential breakout that could propel silver toward the $34.59–$34.87 range. The confluence of a weakening dollar, surging Treasury yields, and expanding deficit risks bolsters the bullish case for silver. With gold also testing resistance and safe-haven demand heightened, silver’s breakout potential is increasing.
A confirmed move above $33.70 could extend the rally toward $34.87. As long as the dollar remains soft and fiscal risks persist, silver appears well-positioned for additional upside. James Hyerczyk is a seasoned U.S.-based technical analyst and educator with over 40 years of experience in market analysis and trading.
Specializing in chart patterns and price movements, he is the author of two books on technical analysis and has a background in both futures and stock markets.
