Q2 Trade Idea – Is it Time for Silver to Shine Brighter?

Is it Time for Silver to Shine Brighter?

Silver is continuing to benefit from the current economic backdrop as sticky, global inflation worries and recessionary fears continue to swirl. And with these worries likely to remain in the coming quarter, the price of silver could continue to move higher and test recent levels of resistance.

The daily chart shows silver’s positive performance since mid-March with the precious metal rallying around 17% off its March 10 swing low. This rally has seen silver trade through the 20-, 50- and 200-day moving averages, adding credibility to the move. A pattern of higher lows and higher highs remains in place with the next target seen just above $24.50. Above here, multi-month highs at $26.21 and $26.94 come into focus. The CCI indicator is currently showing silver as overbought so a period of consolidation may be required before the next leg higher.

Silver Daily Price Chart

The silver /gold ratio also shows silver underperformance against gold since mid-December 2022 with only the recent rally breaking the pair out of the downward channel in the last couple of days. The pair have also moved above the 20-day moving average and near both the 50- and 200-day moving averages. A confirmed break above here would allow the silver/gold spread further room to move higher. The spread pair are also in overbought territory so as above a period of consolidation may be seen in the short term.

Silver/Gold Spread Daily Price Chart

While both charts show the current move higher to be potentially overdone, both setups look positive for silver not just to move higher but for it to also outperform gold as well. The next three months may see silver shine even brighter.