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Silver Price Forecast: Resistance at $31.00 Spells Bad News

Michael Abadha Blockchain market writer
    Summary:
  • Silver price has gained more than 30 percent YTD, outperforming gold's 24 percent, but another rejection at $31.00 favours the sellers.

Silver price spiked on Thursday, up by 3.1 percent and trading at $31.00 at the time of writing. Moving to two-month highs underlines the strong impact brought by the Fed’s interest rate cut announced on Wednesday. The greyish metal has had a good run in the last month, with its gains climbing to 5.4 percent during that period. In addition, silver price is up by 30.4 percent year-to-date, outperforming its richer cousin, gold, whose gains stand at 24.9 percent YTD.

The Federal Open Market Committee (FOMC) members voted 11-against-1 in favour of reducing interest rates by 50 basis points. Furthermore, the Fed gave guidance for as many as two more rate cuts for the remainder of the year, strengthening propulsion for non-yielding silver. The deep rate cuts could also be intepreted as signaling an underlying struggle by the US economy, which could make safe haven metals like silver the more attractive.

However, it is not all rosy for silver prices. China’s industrial output slowed down to 4.5 percent in August, down from July’s 5.1 percent and below the forecast growth rate of 4.8 percent. That portrays a weak outlook for silver’s industrial demand and will exert downward pressure on silver prices. However, lower interest rates could spur increased consumption, and help balance the scales. To that end, I expect silver to continue heading up in the coming weeks.

Silver price today

Silver price will likely head down on the day’s session if resistance peresists below $31.00. The resulting downward pressure will likely find initial support at $30.70, but extended bearish control will breach that mark to send the price lower to the second support at $30.50.

However, if action returns above $31.00, it will tilt the scales toward the upside momentum. In that case, the first resistance could come at 31.29. Furthermore, a move above that mark will invalidate the downside narrative and clear the path to test $31.50.

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