Silver price surged by close to 9% on Monday; surpassing the critical level of $20.00 for the first time since 17th August. On early Tuesday trade, it extended the previous session’s gains to $20.98 as at 07:07 a.m GMT; up by 1.22%. The retreating of Treasury yields has been the major bullish driver of the metal since mid-last week.
Silver price movements are founded on the metal’s dual status. In the recent sessions, it has largely been impacted by its status as a precious metal. In particular, the retreating of Treasury yields has boosted silver price and the broader class of precious metals.
After hitting its highest level since 2009 in the past week at 4.02%, the benchmark 10-year yields extended its losses on Tuesday to 3.58%; down by 1.73%. While traders are still concerned over the Fed’s aggressive policy tightening, the easing of the US bond yields has improved the market sentiment.
On the data front, traders will be keen on the Chinese manufacturing PMI scheduled for release on Thursday. Manufacturing activity in the leading consumer of silver and other industrial metals showed a contraction over the past two months. As such, a reading above 50 will likely ease demand concerns.
At the same time, US jobs data on Friday are bound to impact silver price. Strong figures will likely boost the US dollar and Treasury yields at the expense of dollar-priced assets such as silver.
Silver price prediction
Silver price is trading above the 25 and 50-day exponential moving averages as shown on its daily chart. A look at both the fundamental and technical indicators signals that it will likely remain above the psychologically crucial level of 20.00 in the short term. The expected subtle movements is founded on the assertion that investors are awaiting cues from key economic events later in the week.
In particular, the range between 20.32 and 21.27 will be worth watching in the ensuing sessions. As the week unfolds, weak Chinese manufacturing data and/or strong US job numbers may have the bulls defend the critical resistance-turn-support zone of 20.00. Lack of enough momentum to do so will give the bears an opportunity to retest the level along the 50-day EMA at 19.43.