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

Is it time for silver to shine a little brighter?

Silver continues to benefit from the current economic backdrop as global inflation concerns and recession fears continue to swirl. With these concerns likely to persist in the next quarter, the price of silver may continue to rise and test the recent resistance levels.

The daily chart shows silver’s positive performance since mid-March, with the precious metal up around 17% from its low on March 10. This rally saw silver trade through the 20, 50 and 200 day moving averages, adding credibility to the move. The higher lows and higher highs pattern is still valid with the next target seen above $24.50. Above, multi-month highs at $26.21 and $26.94 come into the spotlight. The CCI is currently showing silver overbought, so a period of consolidation may be required before the next higher strike.

Daily silver price chart

The silver/gold ratio also shows the underperformance of silver against gold since mid-December 2022 with only the recent rally breaking the pair outside the descending channel in the past two days. The pair also moved above the 20-day moving average and near the 50- and 200-day moving averages. A confirmed break above here would allow the Silver/Gold spread more room to move higher. The spread is also in the overbought area, so we may see a consolidation period above in the short term.

Silver/gold daily price chart

While both charts show that the current move higher may be overdone, both systems look positive for silver not only to move higher but to outperform gold as well. The next three months may see a brighter silver sheen.