Silver price got some support from the retreating of the Treasury yields and US dollar by extension on Tuesday. This as investors’ focus remains on Jerome Powell’s testimony and US nonfarm payroll data in the course of the week. At the same time, the cautious economic growth target set by China’s National People’s Congress curbed its gains.
Jerome Powell’s testimony
The Federal Reserve’s Chair, Jerome Powell is set to testify before Congress on Tuesday and Wednesday. Financial markets will be keen on his remarks for direction on how much and for how long the US central bank’s interest rate hikes will continue.
The lawmakers will likely grill the official on the impact that the Fed’s aggressive rate increases have had on the economy. Notably, this comes ahead of the February nonfarm payroll set for release on Friday. After the strong January report, investors will be keen on Jerome’s tone regarding two of its key gauges; inflation and the labor market.
On Tuesday, silver price found some support in the retreating of the Treasury yields. While the benchmark 10-year yields have dropped below the psychological level of 4.00%, a hawkish tone form the Fed Chair may prompt a rebound thus exerting more pressure on the metal.
Seeing that China is the leading consumer of industrial metals, the health of its economy is also a key driver of silver price. Indeed, its recovery from the prolonged COVID-19 pandemic has been on of the asset’s bullish drivers.
Even so, its gains may remain curbed in the short term as the Chinese government shy away from approving a significant economic stimulus. Besides, the National People’s Congress (NPC) presented a rather guarded economic growth target of 5% for the current year.
Silver price outlook
At the beginning of February 2023, silver price rose to its highest level since April 2022. Since then, it has dropped by close to 15%. As at the time of writing, it was up by 0.31% at 21.09.
A look at its daily chart shows that silver price is still trading below the 50 and 200-day EMAs. While it has been on a rebound over a span of one week, I expect the metal to record subtle movements in the short term ahead of Powell’s speech.
In particular, the range between 21.50 and 20.75 will be worth watching. A decline past the aforementioned support level will have the bulls keen on defending the lower level of 20.50.
On the flip side, eased concerns over the Fed’s hawkish tilt may revive the rebound. Even so, I expect the area around the 200-day EMA at 21.95 to remain a steady resistance zone for a while longer.