Silver shortage and rising demand could support the uptrend

On Monday, silver prices recovered by 1.7% after losses in the previous trading session. Early last week, bullion prices reached an annual high of $32,500 per ounce. However, the metal price has lost more than $2 since then. This happened after the publication of the minutes of the latest Federal Reserve meeting, which showed a lack of confidence in a smooth decline in inflation to the 2% level. This prompted traders to reassess their forecasts for Federal Reserve interest rate cuts this year. 

According to the CME FedWatch Tool, traders are expressing doubts about the Fed cutting rates more than once in 2024, pricing in about a 62% chance of a rate cut by November.

On Monday, the US banks will be closed due to the Memorial Day bank holiday. Gold traders will take more cues from the Fed’s speech on Tuesday, including Michelle Bowman, Loretta Mester and Neel Kashkari.

Since the beginning of the year the white metal’s price has risen by almost 29%. The main reason for this growth was a notable shortage of silver in China, indicating the potential for increased imports. This rally in metal prices could be a catalyst for significant buying activity.

From the technical point of view, silver price is forming an upward trend on the D1 timeframe.

In terms of wave analysis, the price is forming the second descending wave on the H2 timeframe. The Bulls Power (standard values) is in the positive zone, which indicates the potential for growth and the transition to the third ascending wave.

Signal:

The short-term outlook for silver is to buy.

The target is at the level of 33,500.

Part of the profit should be fixed near the level of 32,300.

The Stop-loss could be placed near the level of 29,500.

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.