Silver – Tenacious consolidation continues

After the significant peak on December 4th, 2023, at USD 25.91, silver prices corrected around 15.5% over the following seven weeks. Since then, the silver market is stuck in a persistent consolidation phase, characterized by a sideways movement between approximately USD 22 and USD 23.20. Consequently, the lack of a clear trend has caused confusion and frustration among silver enthusiasts. Silver – Tenacious consolidation continues.

A similar sideways consolidation has affected the gold market since the beginning of the year already. The sharp rise in October and November seems to be undergoing a healthy process of digestion and consolidation over time, with no definitive trend reversal apparent yet.

Silver in US-Dollar – Daily Chart

Silver in US-Dollar, daily chart as of February 27th, 2024. Source: Midas Touch Consulting

Silver in US-Dollar, daily chart as of February 27th, 2024. Source: Midas Touch Consulting

With a double bottom at USD 21.92 on January 22nd and USD 21.93 on February 14th, silver attempts to establish a support base. Despite a brief and somewhat turbulent rise in the previous week, the falling 200-day moving average (USD 23.27) has not been reclaimed sustainably so far.

Instead, silver prices have slid southward in recent days, with the daily stochastic indicator providing a sell signal. Whether the broad support zone between USD 21.50 and USD 22.70 will once again cushion the prices remains to be seen. Notably, the lower Bollinger Band (USD 22.07) and the upward trendline of the last four years at around USD 21.50 converge in this area. Along with the oversold weekly stochastic, the chances for a bullish trend reversal seem favorable.

However, silver prices have been moving sideways between USD 21.90 and USD 23.50 since the beginning of the year, still portraying a lackluster and trend-less picture in the sector. An end to this persistent consolidation is not evident for now, emphasizing the need for patience.

Silver in Euro – Daily Chart

Silver in Euro, daily chart as of February 27th, 2024. Source: Midas Touch Consulting

Silver in Euro, daily chart as of February 27th, 2024. Source: Midas Touch Consulting

Calculated in Euros, silver prices in the last four weeks have managed to establish a small uptrend, reaching up to EUR 21.77 while establishing a series of higher lows and higher highs. The little uptrend channel has withstood Monday’s attack as well. While the daily stochastic has turned downward, the weekly stochastic is well-positioned for a multi-week or even multi-month upward movement. Nevertheless, the overall direction remains indecisive over the past four years and hence there is little reason for an immediate change to this patience-costing environment.

Conclusion: Silver – Tenacious consolidation continues

In conclusion, silver continues its slow consolidation. While investors globally celebrate the performance of Nvidia and the US tech sector as well as Bitcoin’s rally, gold and silver currently play a less prominent role. Despite this, gold and silver prices manage to hold relatively well, given the sharp rise in interest rates and a somewhat stronger US dollar. However, new momentum could emerge due to the complex geopolitical situation at any time. As well, the Federal Reserve will likely need to lower interest rates again to stabilize potentially collapsing financial markets. The largely ignored breakout movement in gold remains intact, and it may breathe new life into silver prices throughout the year. Currently, though, patience is key.

Analysis initially published on February 23rd, 2024, by Translated into English and partially updated on February 27th, 2024.

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Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts, and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.