Silver price forecast after the strong China manufacturing PMI

By:
on Mar 31, 2023
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  • Silver price has been in a strong bullish trend in the past few weeks.
  • China's manufacturing and composite PMIs were better than expected.
  • The jump coincides with the performance of other assets like stocks and crypto.

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Silver price continued rallying this week as investors focused on the growth of the Chinese economy and the next trajectory of the Federal Reserve. It rose to a high of $24, the highest it has been since February 2 of this year.

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Chinese recovery continues

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Silver is an industrial metal that is used in the manufacture of several key items, including solar panels, kitchenware, and medical equipment. It is also a precious metal that is often compared to gold, one of the best-known metals in the world. 

Therefore, silver reacts both to industrial demand and monetary policy. Data published on Friday showed that China’s manufacturing PMI dropped from 52.6 in February to 51.9 in March. This decline was better than the median estimate of 51.5. A PMI reading of 50 and above is usually a sign that a sector is growing. 

The non-manufacturing PMI increased from 56.3 in February to 58.3 in March. It was better than the median estimate of 54.3. As a result, the composite PMO increased from 56.4 to 57.0.

These numbers imply that China’s recovery is gaining momentum after the country ended its Covid-19 mandates earlier this year. This means that its demand could be increasing as well. 

Silver price recovery also coincides with the strong performance of gold, American stocks, and cryptocurrencies. Gold is trading at $2,000 per ounce while the Nasdaq 100 index has moved to a bull market, as I wrote here. Bitcoin has jumped to over $28,000 and there is a possibility that it will hit $30,000 soon. These assets tend to have a close correlation. 

Meanwhile, the US dollar index has pulled back as investors position themselves for the next Fed moves. The DXY was trading at $101.87, which was lower than last year’s high of $115.

Silver price forecast 

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Silver price

The daily chart shows that silver price has been in a strong bullish trend in the past few days. It is approaching the important resistance level at $24.55, the highest level in January and February. 

Silver has jumped above the 25-day and 50-day moving averages, which have made a bullish crossover pattern. The Relative Strength Index (RSI) has moved slightly below the overbought level. Therefore, silver will likely continue rising as buyers target the next psychological level at $25. A drop below the support at $23.32 will invalidate the bullish view.

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