Silver price edged lower on Friday following the rebound of the US dollar. This comes as the market digests the better-than-expected growth of the US economy in Q3’22. As at the time of writing, the metal was at $19.20; down by 1.9%.
Fundamentals
Data released by the Bureau of Economic Analysis on Thursday showed that over the third quarter, the US economy recorded its first positive growth in the current year. It’s GDP rose by 2.6% YoY; surpassing the economists’ expectation of 2.4%. The positive figure comes after negative numbers in the prior two quarters; meeting the technical definition of a recession.
Silver price movements are usually founded on its dual status as a precious and industrial metal. On the one hand, fears of a recession have been weighing on the asset in recent months. Since March, its price has dropped by close to 30%.
More recently, the positive US GDP numbers strengthened the US dollar while pushing silver price back below the once steady support zone of $20. Besides, concerns over Chinese demand and the overall slow global economic growth remain key bearish factors in the silver market.
Besides, as a precious metal, silver remains under pressure from the ultra-hawkish Fed. According to JPMorgan’s executive director and global market strategist, Julia Wang, the central bank will likely not temper its aggressive interest rate hikes until the fourth quarter of 2023.
As has been evident in recent months, an environment of high interest rates tends to be bearish for silver price. As such, the asset’s downtrend will likely continue in coming weeks.
Silver price prediction
As shown on its daily chart, silver price found support around the 250-day EMA after erasing its previous gains in early Friday trade. At the same time, it was below the 50-day EMA.
A look at both the fundamentals and technicals signal further losses into the next week. In fact, I expect the metal to remain below the resistance zone of 20.07.
In particular, the range between 19.65 and 19.07 will be worth watching in the short term. With further rallying of the US dollar, the bears may get a chance to retest the lower support level of 18.90.
