Silver's Bullish Case Ahead of US CPI Data - Elliott Wave Analysis

Silver has seen a significant rise over the past few weeks, highlighted by the development of a potential H&S pattern with a breakout above the neckline.

One of the key drivers for silver's ascent is undoubtedly the heightened geopolitical risk in the Middle East and persistent inflation concerns.

However, recent jobs data from the US showing a slight uptick in unemployment has fueled speculation about potential rate cuts by the Fed in the coming months, especially if inflation rates begin to decline. The next inflation report, expected on Wednesday, is anticipated to show a decrease to 3.4% from the previous reading of 3.5%.

It's important to note that silver's price increased from $26 to over $28 in the last two weeks, despite a steady US dollar. Should the dollar weaken following lower inflation figures, it could further bolster the metals market, as a lower dollar is traditionally bullish for metals.

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From a technical perspective, using the Elliott Wave Principle, we've observed a promising impulsive recovery from the beginning of May. This five-wave movement indicates that silver found support around $26, suggesting more upside potential as long as the market remains above this level.

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After a potential ABC correction, a strong support zone could emerge around $27.50, followed by the 61.8% Fibonacci retracement level near $27, which aligns with the previous fourth wave area. This zone could be particularly attractive for a subsequent bounce upwards. Regarding the earlier mentioned neckline, it indeed points to a potential rise above $30 later this year.


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