Silver price is trading over 3% lower this week to test the key short-term support near the $23 mark.
Fundamental analysis: Silver price may go up in 2021
Silver has performed differently during various recessions and bear markets throughout history. For example, during the stagflation crisis between 1976-78, the S&P 500 declined by 19.4% while silver rose by more than 15% during that time.
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Furthermore, during the financial crisis between 2007 and 2009, the S&P 500 tumbled by 56.% while silver ticked up 1.1%. On the other hand, there were also periods of economic turmoil when silver didn’t perform as well.
This year was good for silver as the metal managed registered an outstanding 50.1% increase during the first nine months. Still, it’s also hard to say how silver will do during the upcoming 12 months.
Even though it recorded an incredible performance in 2020, some analysts believe its price could tumble quickly if the U.S. equities market faces another collapse like the one seen in the spring after the coronavirus outbreak.
On the other hand, analysts feel bullish when it comes to short-to-medium term silver performance. If the global economy shows good recovery progress, silver’s bullish trend could easily continue in the next couple of months.
A number of investors and analysts believe that the metal is set to break above the $30-per-ounce mark in 2021, with CIBC currently projecting a $32 price peak next year, followed by a progressive depreciation in the next two years.
Technical analysis: Testing key short-term support
While we’re not sure how silver prices will do in 2021, the short-term outlook looks bearish. The price action is now testing the key short-term support around the $23 mark, which hosts the ascending trend line that connects the higher lows.
A break below $23.00 will likely push silver prices towards $21.60 where the 4-month low is located. A move below this mark will open the way for a bigger push lower towards the key bull/bear line at $19.60, where silver buyers are likely to wait.
Despite silver’s mixed performance during periods of bear markets and economic turmoil, some analysts believe that the metal could hit new ceilings next year if the global economy recovers from the current crisis. However, the short-term outlook for silver will be bearish if the price action breaks below $23.