Silver price outlook: here’s what it will take to end the bearish trend
- Silver price remains range-bound as its bearish trend continues.
- Investors are staying clear of huge bets ahead of Friday's non-farm payrolls data.
- Silver price will likely react more to positive figures than disappointing ones.
Silver price remains range-bound as investors avoid placing huge directional bets ahead of the US nonfarm payrolls data.
US jobs data
In the previous release, the Bureau of Labor Statistics presented a rather disappointing figure of 235,000 compared to the prior 1.053 million and forecasted 750,000. In Friday’s release, analysts expect the additional number of non-farm employees to have reached 500,000 in September.
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Notably, silver price is likely to react more to positive NFP numbers than disappointing one. Even if the figures weaken for the second consecutive month, it is unlikely that that will dampen the Fed’s intentions to taper its economic support program. Following September’s FOMC meeting, the Fed Chair indicated that the policymakers were in agreement to start reducing the asset purchases starting from November as long as the jobs data remains “decent”.
While the US dollar has eased ahead of the highly anticipated numbers, it is still close to the one-year high it hit in the past week. On the one hand, silver and other precious metals are considered to be a hedge against inflation. However, the strong greenback has made these commodities more expensive for the buyers holding other currencies.
Besides, its safe-haven appeal is rather muted. Despite the soaring energy prices and ongoing supply chain constraints, there is no imminent fear on the derailment of the global economy.
Tapering of the Fed’s asset purchases will likely boost bond yields further. If that happens, the opportunity cost for holding non-yielding assets like precious metals will be higher.
Based on these factors, silver price may remain under pressure without necessarily being subject to a major sell-off. For the ongoing bearish trend to come to an end, the bulls need to push the precious metal past the 200-day EMA of 23.15 to the prior resistance level of $23.50.
Silver price technical outlook
Silver price has been trading within a tight range of between 22.20 and 22.79 since the beginning of October. Notably, it was within this horizontal channel since mid-September before plunging below the psychological level of 22.00 to its lowest level since July 2020. It has since rebounded and returned to the aforementioned range.
At the time of writing, silver price was down by 0.47% at 22.48. On a four-hour chart, it is trading along the 25 and 50-day exponential moving averages that have converged at 22.50. At its current level, the outlook is rather neutral.
In the near term, 22.50 will remain a crucial level for the precious metal. By hovering around this level, it will be trading within the formed horizontal channel. As a reaction to the highly-anticipated US NFP data, silver price may retest the support level at 22.00 before bouncing back to the channel.
On the flip side, a move above the range’s upper border will likely place the resistance level at 22.98. The psychological 23.00 may remain an evasive level in the short term.