On Friday, silver prices rose by almost 2% from the lows. Other precious metals also attempted to grow. The change in investor sentiment followed the release of the U.S. consumer spending data.
The U.S. Core PCE Price Index, which excludes food and energy prices, increased by 4.6% year-over-year. In April, it was 4.7%. This data might signal easing inflationary pressures, which could trigger a rate cut by the U.S. regulator. However, the momentum in precious metals prices has been sluggish, highlighting their weakness at the current point in the market. For a proper reversal, there is a need for supporting data on lower inflation and relevant comments from central banks.
Today China’s PMI data came out, which was again lower than the previous figures. On the one hand, this means more stimulus from the central bank. However, many analysts stress that China is limited in its easing options. On the other hand, physical demand for silver is also declining, which is putting pressure on prices.
According to Caixin agency, China's manufacturing activity growth slowed down again in June. Private companies are reducing hiring, becoming increasingly worried about weak market conditions.
The manufacturing PMI fell to 50.5 from its May level of 50.9. Although the figure was better than forecasted (50.2), the increase in business activity is rather insignificant. The Caixin survey traditionally focuses on small and medium-sized businesses, primarily exporters.
The Caixin data were slightly better than the official figures from China's National Bureau of Statistics on Friday. However, they also indicated that the world's second-biggest economy is losing growth momentum.
According to the technical analysis, silver remains in a downtrend. The growth momentum, which began on Friday, might continue to the resistance level. However, there is more room for the decrease. Thus, it is more preferable to open short positions.
The downside target will be last week’s low, which corresponds to the price of $22.15. A Stop-loss will be set at breaking through the resistance level at $23.35.
Silver prices are likely to decline:
Take profit – 22.15
Stop-loss – 23.35
This content is for informational purposes only and is not intended to be investing advice.
