SLV ETF analysis: what next for silver price after the end of the shutdown?

On Tuesday, SLV ETF rebounded above the previous resistance zone of $45 to a three-week high. This is despite the optimism over the reopening of the US government and easing silver squeeze in London. 

In the absence of crucial economic reports, investors and analysts alike are flying blind. As a result, fear continues to define the market sentiment. 

SLV ETF hits 3-week high despite easing silver squeeze

Persistent economic uncertainties have sustained silver’s safe-haven appeal despite heightened optimism over the reopening of the US government. The US Senate has passed the bill to end the 40-day government shutdown and has sent it for approval by the House of Representatives. However, concerns over the US debt and devaluation of currencies have capped the optimism.   

Meanwhile, vaults in London have recorded the highest silver inflows in close to a decade. This is after an extreme silver squeeze that catapulted prices significantly higher than those at New York and Shanghai warehouses.

Earlier in the year, concerns over Trump’s unorthodox trade policies sent silver inventories in London to a record low as massive shipments were directed to New York. In early October, massive purchases for silver ETFs and a surge in Indian demand yielded an extreme silver squeeze. Concerns over the US debt and subsequent US government shutdown further exacerbated the shortage. Indeed, the amount of silver in London vaults was not enough to meet the demand; an aspect that sent prices soaring to over $50 an ounce for the second time on record. 

Notably, the dire situation yielded a highly profitable arbitrage opportunity for those who could swiftly ship the metal from Chinese and US vaults to London. In October, about 48 million ounces left Comex vaults while close to 17 million ounces were shipped from Shanghai. Besides, silver ETFs recorded outflows of close to 15 million ounces. In addition to these outflows, recycled scrap and private vaults have helped replenish London inventories. 

Nonetheless, the period of tightness is expected to last a while longer with the start of the Indian wedding season. Besides, silver has been included in the US government’s Section 232 probe; an aspect that could result in trade restrictions and high tariffs.

SLV ETF price technical analysis

SLV silver ETF rebounded past the crucial resistance-turn-support zone of $45 on Tuesday; rallying to a three-week high at $45.79 as at the time of writing. Despite the optimism over the reopening of the US government and the easing silver squeeze in London, fear remains the key emotion in the broader financial market. It is this safe-haven demand that has sustained it above the bullish channe; that previously defined its price movements. 

In the ensuing sessions, SLV silver price will likely hold steady above the current support level of $45. However, it may trade sideways as the bulls gather enough momentum to break the resistance at $47. For as long as it remains above the 25-day EMA at $43.85, this bullish thesis is valid.