The growth of commodity prices has been one of the main topics on the markets in 2022.
However, this rally has been in jeopardy, over the last few months. Analysing the performance year-to-date (YTD) of some materials, there are significant differences to be seen.
From the 1st of January, natural gas increased in value by 130%, with the main benchmarks for oil (WTI and Brent) growing by around 50%. Sugar, cotton and corn are in double-digit growth, while gold is posting a fractional +1% change. Some other metals, such as copper, silver and tin have modestly declined.
In particular, silver is down year-to-date by almost 5%. From the peak reached in April at $26, silver has declined by around 15%.
Live Silver Price - $/oz
Expectations surrounding an aggressive monetary policy from the Federal Reserve and the consequent strength of the greenback appear to have hit silver more than gold. Meanwhile, the gold-silver ratio jumped above 82. This means that when buying one ounce of gold, an equivalent of 82 ounces of silver is needed.
The fundamental scenario presents many doubts that a sell-off is fully justified. With that being said, it is important to consider the growing importance that silver will have in the green economy, due to its use in both photovoltaic panels and electric cars.
From a technical point of view, the scenario has improved in the last few weeks as the price rebounded from the bottom reached in mid-May at $20.5, to return above $22. Although, the scenario could return negative, with a fall below $21.6-21.7.
In the case of new rebounds, the first important resistance zone is now placed at $22.3-22.4, which the metal already tested last week. A clear break-up of this level could open space for new recoveries, with potential targets to the following resistances, placed at $22.9, $23.2, and $23.5.
In other words, in the case of a proper bullish inversion, the space for a potential rebound is relatively significant.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.