Silver upward movement on geopolitical tensions and central bank action

Silver prices continue to rise for the fifth consecutive day, trading above $33.90 on Monday. This upward trend is driven by safe-haven demand amidst escalating geopolitical tensions in the Middle East and the easing of monetary policy by major central banks.

Investors are closely following the events in the Middle East, where the US administration has called for negotiations to resolve the conflict. However, no compromise has yet been reached.

At the same time, interest rate cuts by the People’s Bank of China, which on Monday cut the one-year loan prime rate to 3.10% from 3.35%, and the five-year loan rate to 3.60% from 3.85%, are also contributing to safe-haven demand. The European Central Bank also cut rates by 25 basis points last week.

Traders expect the Bank of Canada to cut rates by 50 basis points on Wednesday. UK inflation data suggests the possibility of a similar action from the Bank of England and the Reserve Bank of New Zealand next month. Additionally, the US Federal Reserve (Fed) is expected to lower interest rates by 50 basis points by the end of 2024.

From a technical point of view, silver prices on the D1 timeframe are forming an upward trend. In terms of wave analysis, the third ascending wave is forming on the H4 timeframe. The top of the first wave at 32.70 has already been broken, indicating a possible strengthening of the upward momentum. The Bulls Power indicator (default values), which is currently within the positive zone, confirms the strength of the bullish sentiment and suggests that the upward movement will continue.

Signal:

Short-term prospects for silver suggest buying. 

The target is at the level of 36.50.

Part of the profit should be taken near the level of 35.000.

A stop-loss could be placed at the level of 32.000.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.