Silver prices, which slumped for four straight months, may rebound 25 percent after hitting a “double bottom,” according to technical analysis by Steel Vine Investments LLC.
Silver futures for September delivery may climb to $34.50 an ounce this quarter after falling to $26.33 on Sept. 26 and $26.105 on June 28, this year’s low, said Spencer Patton, the Chicago-based chief investment officer for Steel Vine. Prices jumped 5 percent on June 29, the most since Jan. 3.
A double bottom is a chart pattern showing a drop in price, followed by a rebound and then another decline to near the same level, usually indicating support.
“We have jumped back from the inflection point telling us that prices are now headed higher,” Patton said. The first “psychological” level the market will test is $30, he said.
Yesterday, silver futures for September delivery declined 0.4 percent to settle at $27.499 on the Comex in New York. The contract slumped 21 percent in the four months through June.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.