Silver price remained close to the fresh six-week low hit on Wednesday as the two leading economies continue to impact the asset and broader financial markets. In addition to the US debt ceiling talks, the market is also digesting the rather weak Chinese data released earlier in the week.
What’s driving silver price?
The dollar index has been on a rebound in recent sessions even as it remains on its months-long downtrend. Indeed, it appears to be a case of a dead cat bounce rather than a trend reversal.
In addition to the US debt ceiling talks, concerns that the market’s expectations of interest rate cuts by the Fed are misguided are at play. With the subsequent uncertainties, investors are eyeing upcoming data for further cues. As such, silver price may enter consolidation mode in the short term.
As it stands, a rate hike in June cannot be dismissed just yet. PCE price index on 26th May,payrolls numbers on 2nd June, and CPI data on 13th June are some of the figures that may influence the Fed’s decision in the next meeting. Signs that the Fed may maintain a rather hawkish tone may further weigh on silver price.
At the same time, the market continues to digest the recently released Chinese industrial data that were rather weak. The figures released on Tuesday showed that the country’s industrial production rose by 5.6% YoY on April. This was significantly lower than the economists’ estimate of 10.9%. As the leading consumer of industrial metals, the figures have heightened concerns over the recovery of the Chinese economy.
Silver price prediction
Silver price has been on a decline for about two weeks now; erasing the gains made in April. After rebounding to 26.13 earlier in May, the dual status metal is down to 23.41 as at the time of writing. In fact, it extended losses from the previous session to a fresh six-week low on Wednesday.
A look at its daily chart shows that silver price has been trading below the 25 and 50-day EMAs since late last week. Despite the decline, the bulls still have an opportunity to defend the crucial support at 23.45. Indeed, I remain cautiously bullish of the asset. However, this thesis will be invalid by a move below the aforementioned level.
On the upside, silver price may continue to find resistance along the 50-day EMA at 24.29 in the immediate term. The bulls will need to break this resistance for a further rebound to the next target at 24.60.
