Silver price extended its range-bound trading into the new week as the financial markets await additional cues on the health of the US economy and the direction that the Fed’s interest rates are headed. As at the time of writing, it was up by 0.1% at $24.87.
Fundamentals
In the past week, the metal hit a fresh one-year high amid a weakening US dollar. Granted, the contraction of US manufacturing activity curbed silver price gains.
Even so, signs that the country’s labor market weighed on the greenback while boosting the dollar-priced asset. Overall, the recent economic data have highlighted that while the US economy is down, it is still not out.
In the new week, the mood continues. Indeed, this explains why silver price extended its range-bound trading into the new week. To begin with, US CPI numbers and Fed meeting minutes are due for release on Wednesday.
The events will avail further cues on the Fed’s monetary policy. An environment of high interest rates has been weighing on silver price in past months. Signs that inflation is easing, coupled with a dovish stance by the Fed may boost the commodity.
Besides, China’s CPI and trade balance data are set for release in the course of the week. Indeed, the former is scheduled for Tuesday. Seeing that the Asian country is the leading consumer of industrial metals, the numbers may further impact silver price movements in the short term.
Silver price prediction
XAG/USD has been range-bound for about a week after hitting a one-year high. Nonetheless, as highlighted on its daily chart, it continues to trade above the 25 and 50-day EMAs. Indeed, I expect the bulls to remain in control for as long as the asset continues to trade above the 50-day EMA at 22.85.
In the ensuing sessions, signs that China’s economic recovery is gaining momentum and/or pressure on the US dollar may yield a surge past the resistance level at 25.07. If that happens, the bulls will have an opportunity hit a fresh one-year high at 25.35. On the flip side, 24.50 remains a support level worth watching. Past that zone, the bears will be eyeing the psychological zone of 24.00.
