Silver May Have A Strong Start Of 2023 As China Reopens
Silver gained strong upside momentum in recent months as it quickly moved from the $18 level to the $24 level. Will silver continue to move higher in 2023?
As in the case of gold, Treasury yields and U.S. dollar have a material impact on silver market dynamics. However, silver also depends on industrial demand, so it is sensitive to changes in economic outlook.
For silver traders, the key question is whether the world economy finds itself under major pressure in 2023 or global central banks manage to orchestrate a “soft landing” for the world’s leading economies.
China’s reopening has not had a material impact on commodity markets as the country was immediately hit by a strong coronavirus wave. However, China’s demand for commodities, including silver, is set to increase in the first half of 2023, which should provide additional support to silver prices.
It should be noted that gold/silver ratio has returned to levels that were seen back at the start of 2022. Gold/silver ratio has a potential to move lower if industrial demand for silver increases. In 2021, gold/silver ratio fell to 63, compared to the current levels near 76. Assuming that gold price remain stable, the continuation of the downside trend in gold/silver ratio will push silver towards the $28 level.
Silver Must Get Above $24.50 To Continue The Rebound
Silver gained strong upside momentum in recent weeks, but RSI remains in the moderate territory on the weekly chart. The nearest significant resistance level for silver is located at $24.50. If silver settles above this level, it will move towards the next resistance near the $26 level. A successful test of the resistance at $26 will push silver towards the resistance at $27. If silver climbs above $27, it will head towards the next resistance level at $28.50.
On the support side, silver will likely get strong support near the $22.50 level. A move below this level will push silver towards the support at $21.50. In case silver declines below $21.50, it will head towards the next support at $20.50.
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