Silver price hit its highest level since late April on Monday amid heightened hopes over the easing of COVID-19 restrictions by the Chinese government. However, the bulls failed to gather enough momentum to reach the once steady support zone of $24.00 amid jitters of a hawkish Fed.
What’s driving the market?
Hopes over China’s COVID-19 restrictions
Heightened hopes over the easing of COVID-19 restrictions in China is one of the key bullish drivers of silver price. Seeing that the country is the leading consumer of the industrial metal globally, investors are hopeful that the demand for silver will improve.
The latest move by the Chinese administration, following the recent protests, is allowing residents of Beijing to enter parks and other public places without a negative coronavirus test. The city is the nation’s capital.
Notably, jitters over the probability of a hawkish Fed curbed silver price gains. This comes ahead of the central bank’s December meeting scheduled for the coming week.
In his latest speech, Jerome Powell noted that with the persistently high inflation, US interest rates may peak at higher levels. Indeed, the dollar index has continued to trade above $104, which has been a steady support level since late June. Notably, silver price tends to move inversely to the value of the greenback.
Silver price prediction
As I have expressed in recent weeks, I remain bullish on silver price with support from both the fundamentals and technicals. With regards to the latter, the higher highs and higher lows recorded since September are one of the signs upon which my bullish thesis is founded.
Besides, it continues to trade above the 25 and 50-day EMAs. Late last week, it entered the overbought territory with a relative strength index of 71. Granted, it has since pulled back to an RSI of 60. The pullback may be rather corrective as the bulls gather enough momentum to hit the all-so important level of 24.00.
In the short term, 23.30 and 23.90 will be resistance levels worth watching. On the lower side, I expect silver price to continue finding support at the psychological level of 22.00. However, a move below 21.37 will invalidate this bullish thesis.