Stronger U.S. dollar and risks of slowing global economic growth continue to put pressure on silver. On Friday, the price fell to its lowest level since March. Compared to this year's peak, the precious metal has declined by about 15%. Similarly, the stock price of iShares Silver Trust ETF (SLV) has dropped.
The market’s greatest concern is the state of China’s economy. The data published on Sunday showed the continuation of the fall in September. China’s Caixin Services PMI dropped to 50.2 last month. This is lower than the median estimate of 52.0. The Caixin Manufacturing PMI fell from 51.0 to 50.6 points.
The decline in China’s business activity has a negative impact on the silver price, as the country actively uses this metal in production.
There are also signs of slowing economic growth in some European countries and in the United States because of persistent inflation. For this reason, the Federal Reserve (Fed) continues to maintain a hawkish policy. High interest rates keep strengthening the dollar, putting pressure on the silver price.
Meanwhile, Friday's data showed that core inflation in the U.S. slowed in August. At the same time, the core Personal Consumption Expenditure price index (PCE) has been approaching its 2% target over the past three months.
The market is now awaiting Fed Chairman Jerome Powell's speech and the U.S. Nonfarm Payrolls (NFP) data.
According to Head of Global Macro at Tastylive Ilya Spivak, the U.S. data is getting softer and the Fed's pressure is showing itself in more areas. If this week's labor sector data is weak, the white metal could find linear support.
Silver quotations broke through and consolidated at the major daily support at 22.240.
In terms of wave analysis, the price is in the formation of the third descending wave. Breaking through the top of the first wave at the 22,310 level has already occurred. The downward movement may intensify in the near term.
Signal:
The short-term outlook for silver suggests selling.
The target is at the level of 20.050.
Part of the profit should be taken near 21.150.
The Stop-loss is set at 23.350.
Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
