Silver price approaches key resistance ahead of US NFP data

on Aug 31, 2023
  • Silver price has bounced back despite the weak industrial production data.
  • China, South Korea, Europe, and Japan published weak production numbers.
  • Focus now shifts to the upcoming US non-farm payroll (NFP) data.

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Silver price has drifted upwards in the past few days after a series of weak economic numbers from South Korea, China, Japan, and the United States. It jumped to a high of $24.95 on Thursday as traders waited for the upcoming US non-farm payrolls (NFP) data.

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NFP data ahead

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Some of the biggest economies have published relatively weak economic numbers this week. On Thursday, a report showed that China’s manufacturing PMI dropped again in August, signaling that the economy is still struggling.

Further, as I wrote here and here, South Korea and Japan published weak industrial production numbers for July. All these numbers are important since silver is an important industrial metal.

A likely trigger for silver price was the weak US data. A report by the Conference Board showed that the country’s consumer confidence dropped to 106 in August. It was the first time in three months that it retreated.

The labour market is also softening. Data by the BLS revealed that the number of job vacancies in the US dropped to the lowest point since 2021. ADP, on the other hand, said that the economy created just 177k jobs in August.

The other important news came out on Wednesday when data showed that the economy grew by 2.1%, down from the previous estimate of 2.4%. Looking ahead, the US will publish the latest non-farm payrolls (NFP) data on Friday. 

These numbers are also expected to show that the labour market softened again in August. They see the non-farm payrolls (NFP) figure coming in at 170k while the unemployment rate remained at 3.7%.

These numbers are important for silver because of its role as a precious metal and alternative to gold. In most cases, silver tends to do well when investors are anticipating less tightening by the Federal Reserve.

Silver price forecast

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The 4H chart shows that silver price formed a double-bottom at $22.20 on July 26th and August 15th. In price action analysis, this pattern is usually a bullish sign, which explains why it has bounced back recently.

Silver has jumped above the 25-period and 50-period moving averages and is now approaching the key resistance point at $25.25, the highest level on June 20th. Therefore, the outlook for silver is neutral for now. More upside will happen if silver rises above $25.25. Such a move will open the possibility of it moving to the next key level at $26.13.

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