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Silver Institute Predicts Metal Supply Shortage

12/6/2022 1:02 PM

The XAG/USD pair currently continues its local corrective trend, trading around 22.36. The main driver of the upward dynamics remains the weakening of the US dollar, which fell from 114.000 points to the current 105.000 points in the USD Index over the month. Such a sharp change in direction made investors look for a new shelter for their capital.

The increasing gap between supply and demand in the market can also support the position of the asset: back in early October, the Silver Institute predicted that in 2022 the demand for the precious metal would increase by at least 5.0% and reach 1.11B ounces with a relatively constant supply, which will amount to 1.09B ounces, provoking an increase in prices. At the end of last week, experts revised their preliminary estimates of demand, raising it sharply by 16.0% to 1.21B ounces, which means an even greater shortage of supply, which, according to forecasts by the statistics portal Metals Focus, could reach 194.0 by the end of the year. Confirming the trend, the London Bullion Market Association reported a drop in silver stocks over the past year by a record 27.2%.

On the daily chart of the asset, the trading instrument continues the global correction, heading above the resistance line of the wide rising channel.

Technical indicators, despite the slowdown, keep a stable buy signal: the range of fluctuations of the EMA on the Alligator indicator expands, and the histogram of the AO oscillator forms new bars in the buy zone.

Resistance levels: 23.10, 24.40. | Support levels: 21.60, 19.80.

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