Silver price: a bullish breakout is in the horizon
- Silver price is back to the resistance zone of $24 after dropping to its lowest level YTD three weeks ago.
- Focus is now on industrial output numbers from various economies, US jobs data, and consumer confidence.
- In addition to its industrial appeal, the declining greenback may further boost silver price.
Silver price ended the week at the resistance zone of $24. In the new week, the expected data will reflect on its appeal as both an industrial and precious metal.
Silver doubles up as both a precious and industrial metal. According to Metals Focus, who remain bullish on the commodity, its industrial demand will continue to boost prices. Increased interest in solar panels, electric vehicles, and microchips is expected to heighten demand.
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In the recent Precious Metals Weekly, Metals Focus forecasted silver to record an 8% YoY growth. Earlier in the year, the firm forecasted that silver price will average at $27.30 in the current year and may surge further to $32.
In the new week, silver price will react to manufacturing PMIs from various industrial economies. The US, UK, Japan, and the Eurozone are scheduled to release data on their August’s industrial output in the course of the week.
Nonetheless, investors will be rather keen on China’s manufacturing PMI numbers. The data expected on Tuesday and Wednesday comes amid heightened concerns over the country’s slowed pace of economic growth.
In the past two releases, the Middle Kingdom’s Caixin manufacturing PMI has come in lower-than-expected even as it remains above 50. A reading of 50 and above usually indicates the sector’s expansion.
Silver has also had its price rise as a reaction to the declining value of the greenback. This is founded on the inverse correlation that exists between the greenback and commodity prices.
On Friday, Powell’s cautious stance pushed the dollar index below the crucial support level of $93 to end the week at 92.68. In the new week, the US pending home sales, consumer confidence, manufacturing PMI and jobs data will be key drivers of the precious metal’s price.
Silver price technical outlook
Silver price ended Friday’s session at around the psychological level of 24. Notably, the bulls have lacked enough momentum to retest the level since the plunge three weeks ago. The precious metal starts the week at 24.02, up by 1.99%.
After bouncing back from its lowest level year-to-date, it has been trading within a horizontal channel of between the support zone of 23 and resistance level of 23.96. On a four-hour chart, it is trading above the 25 and 50-day exponential moving averages.
In the ensuing sessions, I expect silver price to hover around the resistance-turn-support zone of 24. Based on the fundamentals, I am of the opinion that a bullish breakout is imminent.
Entry of more buyers into the market may have the bulls retest the prior resistance level of 24.50. However, for that to happen, they will need to break the barrier at 24.25. On the flip side, a decline below 23.96 will likely place the support level along the 25-day EMA at 23.65.