Silver price has been in recovery in recent weeks. In fact, it has held steady above $22.00 since rebounding past the resistance-turn-support level in late November.
Nonetheless, compared to its more lustrous cousin – gold – silver price gains have been rather subtle. Since the beginning of 2023, the latter has had its value increase by less than 2%. In comparison, gold price has risen by about 5% during the same timeframe.
Divergent drivers
As a precious metal
Silver is a duo status metal; with its performance in the financial markets being founded on its uses as an industrial and precious metal. As a precious metal, hopes that the Fed will soon ease on its aggressive monetary policy has been one of it’s key bullish drivers. Indeed, it’s largely behind the over 25% price increase recorded since the beginning of November.
Even so, investors are aware that the US central bank remains keen on dealing with the persistently high inflation and may remain hawkish for a while longer. Indeed, this uncertainty is partly behind the curbed silver price gains. Even with the significant rebounding, $25.00 remains evasive to the bulls.
As an industrial metal
At the same time, its status as an industrial metal has further shaped its price path in recent months. Notably, mixed economic data from China is the most recent influential factor for silver price. The asset eased on its rally on Tuesday after data showed that the second-largest economy grew by just 3% in 2022.
With COVID-19 restrictions being the main underlying factor, the nation’s GDP numbers missed the government’s official growth target of 5.5%. interestingly, the aforementioned figure was already the lowest in decades. Besides, the GDP was rather flat in Q4’22 compared to the prior quarter. It rose by 2.9% YoY; exceeding economists’ expectations of a 1.6% growth.
Even with the mixed economic data from China, investors continue to hang on to the hope that the Asian country will recover significantly in 2023. In the ensuing sessions, Bank of Japan’s interest rate decision and its impact on the US dollar will further impact silver price.
Silver price prediction
The asset has remained above the 25 and 50-day EMAs despite easing in Tuesday’s session as shown in its daily chart. A look at both the fundamentals and technicals point to curbed gains in the short term.
In particular, the bulls are keen on defending the support at 24.00. Failure to successfully do so will place 23.51 and 22.90 as viable support levels. On the upside, there will need to be enough bullish momentum to break the resistance at 24.77 for the bulls to get an opportunity to boost silver price further to the psychological level of 25.00.
