Silver (XAG) Daily Forecast: Will China’s Manufacturing Boost Halt Silver’s Slide?

Market Overview

Silver (XAG/USD) is having trouble recovering from early losses. It traded near $28.37 and hit an intra-day low of $28.29. The primary factors driving this decline are the strengthening U.S. dollar (USD) and rising U.S. Treasury bond yields, both fueled by expectations of positive economic data.

The U.S. ISM Manufacturing PMI for August is projected to increase to 47.5 from 46.8 in July, signalling a slight recovery in the manufacturing sector.

Additionally, the U.S. economy is expected to add 163,000 jobs in August, with the unemployment rate forecast to dip slightly to 4.2%. These indicators point to economic resilience, further bolstering the dollar.

China’s Manufacturing Recovery Offers Potential Silver Price Support

On the international front, China’s Caixin Manufacturing PMI rose to 50.4 in August from 49.8 in July, surpassing market expectations of 50.0. This improvement suggests that manufacturing conditions in China are stabilizing, which could lead to increased industrial demand for silver, potentially supporting higher prices.

“China’s better-than-expected manufacturing data could be a positive driver for silver,” noted a commodities analyst at JPMorgan. “If the trend continues, we might see stronger industrial demand for silver, especially in sectors like electronics and automotive.”

Technological Demand and Future Prospects

Adding to the potential for a silver price rebound is the anticipated increase in demand from the technology sector. Samsung’s new solid-state batteries, which require significant amounts of silver, could drive up demand.

As the market anticipates this technological shift, investor interest in silver may grow, helping to stabilize prices and possibly reverse recent declines.

U.S. Economic Data and Fed Expectations on Silver

The recent U.S. economic data has not only strengthened the dollar but also influenced market expectations regarding the Federal Reserve’s future rate decisions.

According to the CME FedWatch tool, the Fed’s actions will be closely watched. There is a 69% chance of a 25 basis point rate cut in September and a 31% chance of a 50 basis point cut.

Strong U.S. economic performance could support silver prices despite these factors by indicating a broader economic recovery. This recovery could, in turn, drive industrial demand for silver, offering a potential boost to prices even in a challenging market environment.

Short-Term Forecast

Silver (XAG/USD) faces bearish pressure below $28.66, with immediate support at $28.28. A break below could lead to further declines towards $27.98.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $28.37, down 0.67% over the last 4 hours. The metal struggles to maintain its footing below the pivot point of $28.66, indicating a bearish bias in the short term.

Immediate support is at $28.28, and if breached, we could see further declines towards $27.98 and $27.66. On the upside, resistance lies at $28.98, followed by $29.33 and $29.69. The 50-day and 200-day EMAs, both at $29.01, serve as key resistance points.

The trend remains bearish as long as prices stay below $28.66, but a break above this pivot could shift the momentum back to the bulls.