Silver prices (XAG/USD) are on the rise, climbing by over one and a half percentage points into the $25.20s on Friday, primarily driven by technical buying and optimistic long-term fundamentals.
The surge in the precious metal, utilized both in industrial applications and as a store of value, follows the release of US Industrial Production data, which exceeded expectations with a 0.1% increase in February, contrary to economists' forecasts of flat growth. This data, disclosed by the US Federal Reserve (Fed), also marks an improvement from the negative 0.5% recorded in the previous month.
A positive outlook for global economic growth has led analysts like Marcus Garvey from Macquarie to speculate that silver could witness further gains, driven by increased demand for its usage in the production of solar panels, various electronic devices, and jewelry.
Despite recent inflation data from the US surpassing expectations, Silver bulls remain undeterred, indicating a delay in the Federal Reserve's interest rate cuts. Typically, a higher interest rate outlook would bearish for Silver due to its non-yielding nature, but this scenario hasn't manifested this time.
The Silver Institute, a US-based non-profit organization, has forecasted robust demand for Silver in 2024, predicting it to witness its second-best year on record, with demand surging to 1.2 billion ounces.
From a technical standpoint, XAG/USD is currently confined within a range of $19.00 to $26.00, which is nested within a broader range spanning from $17.50 to $30.00. It is currently experiencing a short-term bullish uptrend within these ranges, nearing the upper limits. A definitive break above $25.85 would likely signal an upward breakout, intensifying bullish sentiments.
Should such a breakout occur, Silver could rally towards approximately $29.50, based on the 0.618 Fibonacci ratio of the range, or nearly $32.00 if extrapolating the full height of the range.
On the contrary, the precious metal may encounter strong resistance around the range highs in the $25.80-90s and experience a pullback. Traders are advised to await a decisive break higher, characterized by a prolonged green daily candle piercing above the level and closing near its peak, or three consecutive green candles surpassing the level, before entering the market.
