While March has been rough for silver and exchange traded funds, such as the iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), some technical signs could be emerging that the white metal might be nearing a bottom.
Impressively, SLV and SIVR traded higher Wednesday after the Federal Reserve unveiled its first interest rate hike of 2017. That could prove to be an encouraging sign for silver investors.
Inflows to silver ETFs have been mixed to start the year, indicating that some investors may be concerned about the impact of the Federal Reserve raising interest rates on silver and other commodities.
Silver and other precious metals enjoyed safe-haven demand as the equities market plunged into a correction. The Federal Reserve is targeting three interest rate hikes this year, which could white on precious metals, but some market observers believe there is upside to be had with the white metal.
“Since that posting, Gold and Silver have continued to create a series of lower highs over the past 6-years. Silver remains more than 50% lower than 2011 prices. Could this trend be attempting to change? Could a long-term reversal pattern be in play?,” reports ETF Daily News.
Silver could get another boost if gold prices start rebounding in earnest. Indian demand is vital for gold because the country is the second-largest buyer of the yellow metal behind China. India, one of the world’s largest gold consumers, could be set to lower its import tax on bullion, which could be major catalyst for gold prices.
Still, emerging market demand for gold has not picked up yet. For instance, China has shown little demand, with the Shanghai Gold Exchange seeing little growth in volume.
Even if safe-haven demand for hard assets abates, silver exchange traded funds could continue to find support out of the industrial sector as the precious metal is a major component in many manufactured products.
For instance, silver used in the photovoltaic panel industry is growing and could reach record levels in 2018, Maxwell Gold, Director of Investment Strategy for ETF Securities, said in a note.
“Over the past two years, Silver could be creating a long-term bottoming pattern (Inverse Head & Shoulders) pattern. For the read to be correct, the first thing Silver needs to accomplish is break above 9-month falling channel at (1). If Silver can accomplish a 9-month breakout, the next resistance test Silver would face, is the potential neckline, that comes into play around the $19 zone,” according to ETF Daily News.
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