Silver (XAG) Daily Forecast: Bearish Sentiment Below $28.40 as China Growth Slows

Market Overview

Silver prices declined, trading around $28.31, with an intra-day low of $28.21. Concerns over China’s economic outlook primarily fuel the drop. As a leading global silver exporter, China’s slowing economy has raised worries about reduced industrial demand for the metal.

Bank of America Global Research recently revised its GDP growth forecast for China from 5.0% to 4.8% for 2024, indicating ongoing economic challenges. Weaker industrial usage, combined with a downgraded growth outlook, will likely weigh on silver prices in the near term.

China’s Economic Data Signals Weakness

Recent data from China underscores a weakening economy. The Services Purchasing Managers’ Index (PMI) dropped to 51.6 in August from 52.1 in July, missing the forecast of 52.2. This signals a slower pace of growth in the services sector, adding to broader concerns about the country’s economic recovery.

Bank of America’s revised GDP forecasts, which also downgraded 2025 growth to 4.5%, further highlight the potential for lower demand for silver, especially given China’s role as a major player in global industrial metal consumption.

This slowdown adds significant downward pressure on silver prices, as industrial demand could continue to weaken.

Fed Rate Cut Speculation Offers Silver Support

On the U.S. front, growing speculation around a Federal Reserve interest rate cut may provide some support for silver. Recent U.S. economic data, including a weaker-than-expected JOLTS job report, has increased the likelihood of more aggressive monetary easing.

According to the CME FedWatch tool, there is a 43% chance of a 50 basis points (bps) rate cut at the Fed’s next meeting in September. Additionally, market participants are eagerly awaiting Friday’s U.S. Nonfarm Payrolls (NFP) report, which is expected to show 161,000 new jobs.

A weaker jobs report could drive the U.S. dollar lower, making silver more attractive as a non-yielding asset.

Short-Term Forecast

Silver (XAG/USD) remains bearish below $28.40, struggling to break key resistance. A breakout could trigger bullish momentum, but failure may lead to declines toward $28.08.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $28.31, up 0.15%, but still faces resistance around the $28.40 mark, which coincides with a key downward trendline. This trendline has been acting as a barrier to further upside, and it’s crucial for silver to break above it to sustain its current momentum.

The 50-day Exponential Moving Average (EMA) sits at $28.48, adding additional resistance, while the 200-day EMA at $28.82 suggests that the broader trend remains bearish unless these levels are breached.

Immediate support can be found at $28.08, with further downside at $27.78 and $27.44. A break below $28.08 could lead to further declines, while a break above $28.40 would signal a potential bullish reversal.

In summary, silver remains bearish, below $28.40, but a breakout could shift sentiment to the upside.