The Bullish Case For The Ishares Silver Trust ETF

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  • The iShares Silver Trust ETF has bounced back in the past few weeks.
  • Investors believe that the Federal Reserve will start cutting interest rates in 2024.
  • China has also committed to supporting its ailing real estate sector.

The iShares Silver Trust (SLV) stock price continued rising this week in hopes that the Federal Reserve will ease monetary policy in the coming months. The fund, which tracks silver prices, rose to $22.68 on Monday, the highest point since September 1st.

DXY and VIX indices slip

The rallying SLV ETF has coincided with the ongoing US dollar index (DXY) and CBOE Volatility Index (VIX) retreat. The VIX index has crashed to $12, which was a 50% retreat from its highest level this year.

Similarly, the dollar index has retreated to $103.18, the lowest point since August 31st. It has fallen by almost 4% from the highest point this year. Further, the fear and greed index has risen to the greed zone of 65 while American equities have rallied.

This price action is mostly because of the rising hopes that America’s inflation will continue falling in the coming months. The most recent data showed that the headline inflation dropped to 3.2% in October. Core inflation fell to 4.0% in the same period.

Meanwhile, gasoline price has dropped to $3.2 from the year-to-date high of almost $4. And with the price of Brent and WTI falling, there is a likelihood that gasoline prices will continue retreating.

Therefore, the Federal Reserve will likely decide to leave interest rates unchanged in its December meeting. The dot plot will also show a plan to cut in 2024, a positive catalyst for silver and gold prices.

The other catalyst for the iShares Silver Trust is the actions in China, where Beijing is working to save the struggling real estate sector. Beijing intends to use state-owned banks to extend financing to complete stalled projects. These actions are positive for silver because of its role as an industrial metal.

The SLV ETF has other catalysts, including increasing investments in solar energy and semiconductors. 

SLV ETF price analysis

(Click on image to enlarge)


SLV chart by TradingView

Turning to the daily chart, we see that the iShares Silver Trust stock has been in a strong bullish trend in the past few weeks. Along the way, the stock has moved above the 61.8% Fibonacci Retracement level.

The fund has also jumped above the descending trendline that connects the highest swings since May. It has also jumped above the 25-day and 50-day Exponential Moving Averages (EMA), which is a bullish sign. 

Therefore, if the uptrend continues, the next level to watch will be at $23.93, the highest swing on May 4th. The stop-loss of this trade will be at $22.

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