Silver prices in 2017 have been a mixed bag lately.
If the silver price action two weeks ago was discouraging, the past week was the polar opposite.
In fact, anyone who held silver last week was rewarded with a solid 2.9% return.
The price of silver struggled in the first half of the week, trending sideways to downwards as the market awaited confirmation of a Fed rate hike.
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This caused silver market participants to follow the old adage, but in reverse. It was a case of “sell the rumor, buy the news.”
And those traders and investors were buying in full force. Silver prices rallied from a low of $16.77 before the rate hike to $17.48 the next morning. That’s a blistering 4.2% gain in under 24 hours.
Though silver traded intraday through its 50-day moving average of $17.43, it has yet to close above it. But based on its bullish action, I don’t think it will take long.
That’s why I’m going to share with you my near-term silver price forecast, which shows how high the metal will reach by the end of this quarter.
First, here’s a recap of silver’s strong gains last week…
Silver Prices in 2017 Rebound from the Fed Rate Hike
On Monday, March 13, silver gave a strong showing early in the day on the back of a weak U.S. dollar. The silver price ran above the $17 level but eventually fell back to $16.95 by the close. Still, the metal marked a slight gain of 0.2% from the previous close of $16.92 on Friday, March 10.
Tuesday proved to be much weaker as the dollar surged in afternoon trading. The price of silver dropped 0.5% on the day to settle at $16.84.
But the FOMC announcement of an interest rate hike on Wednesday sent silver prices soaring. Silver traders remained reluctant as the U.S. Dollar Index (DXY) remained high near 101.7. But right around announcement time, the dollar tanked and silver surged 2.9% to $17.32 by the close.
Here’s how the dollar moved over the past week…
That huge loss in the dollar coincided with silver’s stunning gains, as shown in this chart below…
On Thursday, as the market further digested the Fed’s confirmed hike, silver pulled back a little. It eventually settled at $17.29 for a loss of 0.2%.
Friday’s open brought a bump in silver as the dollar remained weak. It opened higher at $17.35 and moved even higher to close the week at $17.41. With that, silver prices gained 0.5% on the day and 2.9% on the week.
But last week’s gains are just the start of a big near-term surge. I’ve found two momentum indicators that show silver has more room to run over the next three months.
Here’s my silver price prediction for the end of the second quarter (Q2)…
Silver Prices Could Hit This Target by June 30, 2017
When determining an outlook for the price of silver, it’s often useful to compare the action in silver stocks with the metal itself…
As we can see from the above chart, the Global X Silver Miners fund (NYSE Arca: SIL) – which follows the performance of silver mining stocks – peaked on Feb. 8 at $41.20. Three weeks later, on March 1, the iShares Silver Trust ETF (NYSE Arca: SLV) – which follows silver prices – peaked at $17.44.
In other words, stocks clearly outperformed the price of silver during the recent correction.
Now, we’ll have to watch to see if silver stocks continue to lead silver itself through to the end of June. Based on their strong bounce last week, it looks like both will be heading higher soon.
Looking at the silver price chart below, you can see that we’re at a crucial junction where the 50-day moving average of $17.43 closes in on $17.50. That level has acted as both support and resistance several times in the past year.
The blue line represents the 50-day moving average of $17.43, while the red line shows the 200-day moving average of $18.04.
Given that the RSI and MACD momentum indicators are starting to turn in silver’s favor, I think the metal will soon push through the $17.50 level with ease.
After that, the next target looks to be $18.50, which silver could take out by the end of Q2 on June 30, 2017. That would be a gain of 6.3% from the current price of $17.40.
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