silver price
Silver price has been relatively boring in the past few months. Since September, the white metal has made no dramatic moves and has not participated in the strong rally on equities. Instead, it has ranged between $21.7 and $26. However, analysts who spoke to Barron’s believe that the metal will soon surge to $30.
In the report, Barrons cited the rising demand for 5G equipment and solar panels as the key drivers for the upcoming rally. As I have written before, silver is an important component in the manufacture of solar panels and several 5G equipment. As such, with the EU about to implement a multitrillion pound stimulus package, there is a possibility that demand will rise.
Similarly, in the United States, Joe Biden has pledged to implement a multitrillion clean power plan. Specifically, he is targeting to add more than 500 million solar panels in the next five years. This will lead to higher silver price, according to Barrons since supply is not expected to increase as much.
In addition, the resurgent China economy will lead to more demand as the middle class buys more silver-made jewelry.
Meanwhile, the weaker US dollar will possibly support silver prices. Analysts at most major banks now believe that the current dollar weakness is here to stay.
While the extent of the weakness is still not yet well-known, analysts at Morgan Stanley are already pricing-in a 10% decline of the dollar index. In general, a weaker US dollar is usually a positive thing for silver prices.
In a statement, analysts at Citi, who expect silver to rise to $40 said:
“The rapid development of 5G network infrastructure and rising demand for high-speed internet access should become the new pillars.”
On the daily chart, we see that silver price has been relatively boring recently. At the current price, it is along the middle line of the Donchian channels. It is also between the 23.6% and 38.2% Fibonacci retracement levels.
Therefore, in the near term, I predict that the metal will remain unchanged at the current range. In the near term, however, the key levels to watch will be the support and resistance points at $21.7 and $26, respectively.
