- Silver price is trading steadily above $24 after reaching the previously-evasive level on Friday.
- In the new week, US consumer confidence and jobs data will impact the precious metal by extension.
- Investors are also keen on industrial output data from China and other economies.
Appeal as a precious metal
Silver price is holding steady above the crucial resistance level of $24. On Friday, it surged to reach the level that has been evasive for about three weeks. The rise was a reaction to the Fed Chair’s speech during the Jackson Hole meeting.
In his speech, Jerome Powell insisted that the expected tapering should not be perceived as a precursor for rate hikes. Subsequently, the dollar index plunged below the crucial support level of $93 to trade at its lowest level since mid-August.
Based on the inverse correlation between the value of the US dollar and precious metals, the remarks were a bullish catalyst for silver price. In the new week, US pending home sales, consumer confidence, and jobs data will impact the greenback and silver by extension. In the immediate term, investors will be digesting Fed’s position.
In addition to being a precious metal, silver also gets its appeal from the industrial sector. Despite its low performance as a precious metal, its steady industrial demand has offered support to prices. This is largely because of the ongoing boom in electric vehicles and solar panels subsectors.
Two weeks ago, Silver Institute’s executive director, Michael DiRienzo projected that silver demand will surge in 2021’s second half. As one of the underlying drivers, solar panel’s global capacity is expected to surpass the 150 Gigawatts mark by the end of the current year.
Despite the recent headwinds, Metals Focus has remained bullish on silver price. In its recent Precious Metals Weekly, the research firm forecasted that silver’s industrial demand will result in an 8% growth year-on-year. The company expects silver to average at $27.30 per troy ounce in the current year.
With regards to industrial demand, investors will be keen on the industrial output numbers from various economies. In addition to the US, UK, Japan, and Eurozone, China is scheduled to release its manufacturing PMI numbers for August.
In the past two releases, the country’ Caixin manufacturing PMI came in lower-than-expected. The subsequent concerns over slowed economic growth in the Middle Kingdom weighed on silver price. As the nation gains control over the Delta variant, investors will be keen on Tuesday and Wednesday’s industrial output numbers. Interest in China’s manufacturing PMI is founded on its position as the leading consumer of industrial metals in the world.
Silver price technical analysis
Silver price has begun the week in the green as an extension of last week’s gains. On Friday, it surged to the resistance level of 24. Notably, that level has been an evasive one since falling to its lowest level year-to-date about three weeks ago.
During the three weeks, the precious metal’s price has been within a rather tight range of between 23.96 and 23.00. The current price movements are an indication that silver price may be ripe for a bullish breakout.
In addition to the fundamentals, key technicals also validate my bullish outlook. On a three-hour chart, it is trading above the 25 and 50-day exponential moving averages.
In the near term, I expect the commodity to hover around the resistance zone of 24 as the bulls gather enough momentum to push it to its next target at 24.50. As that happens, it will likely experience some resistance at 24.39. On the flip side, it may pull back to find support along the 25-day EMA at 23.81 before bouncing back to 24.