Silver Could Break $35 Per Ounce This Summer

(July 9, 2024 - Fawad Razaqzada, StoneX Group)

(Kitco News) – Silver prices have seen a pullback early this week, but the gray metal is poised to break out above $35 per ounce over the summer, according to Fawad Razaqzada, Market Analyst at StoneX Group.

In an analysis shared with Kitco News, Razaqzada noted that silver was down about 1% after rising about 7% last week to post its best weekly gain since mid-May.

“Those gains came as the metal broke out of a continuation pattern and with the dollar falling against a basket of foreign currencies thanks to weakness in US data, raising investor expectations about a September rate cut by the US Federal Reserve,” he said. “Concerns about the French elections on Sunday had also boosted precious metals’ appeal last week. But after a surprise win for left-wing alliance, which helped to keep Le Pen’s far right from power, this partly explains why both gold and silver have started this week on the backfoot, with European shares rebounding in a mild risk-on session.”

Razaqzada said that markets will be very attentive to inflation data this week, which will put the focus on the dollar and dollar-denominated assets like gold and silver. “Despite their weaker start to the week, gold and silver may have long ways to go on the upside,” he wrote. “Dip-buying remains my preferred strategy in precious metals.”

Turning to the technical picture, Razaqzada noted that prior to last week, silver had been trending lower in June. “But after testing a major support area around $28.70 to $29.00, the buyers have evidently stepped back in,” he said. “They have pushed silver back above several short-term resistance levels in the process, some of which are now going to be tested from above and will need to hold to maintain the renewed bullish trend.”

“As well as reclaiming the bullish trend line that has been in place since February, silver has also climbed back above the 21-day exponential average and more important, it has broken the resistance trend of its bull flag pattern around $30.00 to $30.20 area,” he added. “Therefore, this $30.00-$30.20 range is now going to be a key support area to monitor this week, should we see a retracement, say on the back of the CPI data.”

Razaqzada said that in terms of upside targets, “$31.50 is the first line of defense for the bears, followed by $32.00 and then the May high at just above $32.50.”

“The line in the sand for me is now at $28.70ish, representing the recent lows,” he added. “A potential break below this area would invalidate my bullish view, given that we have now seen an interim higher high and a breakout from the bull flag pattern to the upside.”

“But as we look at the long-term weekly chart, silver could be on the verge of a much bigger move given that it has only recently broken out of a long-term consolidation zone,” Razaqzada concluded. “As things stand, I wouldn’t be surprised to see silver rise towards $35.00 in the coming weeks, if not higher.”

Spot silver last traded at $31.033 per ounce at the time of writing and is essentially flat on the session.