- Summary:
- Silver price broke the critical support at $30 on Friday following US NDP data release, but the metal has resurged to hover near the mark.
Silver prices returned to the upside on Monday, gaining 1.6 percent to trade at $29.85 per ounce at the time of writing. The commodity is making an attempt to return to the psychological support level of $30 per ounce, which it broke on Friday following the release of US Nonfarm Payrolls data. XAGUSD drew a long bearish candlestick, losing 6.14 percent following the forecast-beating data.
As a precious metal, silver is used by some investors to hedge against inflation and US dollar depreciation. Therefore, the commodity’s appeal was reduced after the May NFP data showed that the US economy added 272k jobs, exceeding the forecast 182k. This has not only strengthened the US dollar, but also cemented market confidence that the Federal Reserve will retain the current 5.25-5.50% interest rate when it announces its decision on Wednesday.
That said, it is worth noting that silver could find support away from safe haven demand. There has been widespread belief that silver production has not risen to reflect the rising demand in the international market. Some analysts have projected that the grey metal’s industrial demand is likely to rise exponentially, especially in view of the growth of the electric vehicle (EV) market. According to Metal Focus, the global silver deficit is expected to rise by 17 percent to 215.3 million ounces in 2024. This is expected to be primarily driven by a 2 percent rise in industrial demand and a 1 percent decline in production.
Technical analysis
The momentum on silver prices signals that the buyers are currently in control, with the pivot mark likely to be at 29.70. The upward momentum will likely encounter the first resistance at 29.90, beyond which the resulting momentum could lead to further gains to test 30.20. On the other hand, a break below a break below 29.70 will signal control by the sellers. In that case, the first support could come at 29.51, and a break below that mark could invalidate the upside narrative. Furthermore, extended control by the sellers at that point could propel further losses to test 29.30.
