Silver price extended Friday’s gains on Monday as investors digest the recent US jobs data. The Fed’s move during its September meeting remains the main issue on traders’ minds. At the same time, China’s services PMI offered some support to the dual status metal.
Silver is both an industrial and precious metal. Overall, its performance in the financial markets are largely impacted by the health of the global economy and the US dollar. With regards to the latter factor, silver price tends to move inversely to the value of the greenback.
On Friday, the dollar index pulled back as a reaction to the nonfarm payrolls reported by the US Labor Department. Notably, the economy added 315,000 jobs in August compared to 526,000 in the previous month. At the same time, unemployment rate rose from 3.5% to 3.7% while the wage growth missed economists’ expectations.
While the figures showed some easing in the labor market, the US dollar has rebounded in Monday’s session as traders still expect the Federal Reserve to be ultra-hawkish during its meeting later in the month. An environment of high interest rates has been weighing on silver both as a precious and industrial metal.
Nonetheless, China’s services PMI has offered some support to the commodity. Indeed, it beat the analysts’ forecast of 54.0 to come in at 55.0. A figure above 50 usually represents the economy’s expansion. China’s trade balance figures are set for release later in the week. Data on economic activities in the Middle Kingdom tends to impact silver price as it is the leading consumer of the metal.
Silver price prediction
Silver price has been on a downtrend in recent months; declining by over 30% over the past 6 months. Last week, it dropped past the critical support level of 18.17. In early Monday’s trade, it is hovering around the aforementioned level after extending Friday’s gains. Even so, it remains on a bearish trend. On a daily chart, it is trading below the 25 and 50-day exponential moving averages.
Based on both the fundamental and technical indicators, silver price will likely remain on a bearish trend on the short term. I particular, I expect it to remain below the support-turn-resistance zone of 18.55. Indeed, a move above this level will invalidate this bearish thesis.
In the immediate term, 18.17 will be a resistance level worth watching. On the lower side, it will likely remain above the support level of 17.56.