Silver price outlook after soft Chinese manufacturing data

Summary:

Silver price is findings resistance at the important level of 28 after lower-than-expected Chinese manufacturing PMI. However, the data was still above 50.

Silver price is trading higher as a reaction to Chinese manufacturing data. In addition to being a precious metal, silver also has various industrial applications. Notably, China is a key consumer of the metal for the manufacturing of various products including silverware, jewellery, and solar panels.

According to the country’s National Bureau of Statistics, May’s manufacturing PMI was at 51.0 compared to the prior month’s 51.1. Economists had expected the level of manufacturing activity to remain unchanged. While the reading was lower than expected, it was still above 50. A reading at or above 50 signals expansion of the manufacturing sector.

In addition to the lower-than-expected manufacturing data from China, industrial figures from Japan have curbed silver price gains. On Monday, the nation’s Ministry of Economy, Trade, and Industry noted that industrial production had risen by 2.5% MoM compared to the forecasted 4.1%. However, it is higher than the previous 1.7%. The ministry forecasts that industrial production will decline by 1.7% one month ahead compared to the prior prediction of an 8.4% increase.

Technical outlook

Silver price is up by 0.22% at 27.99. The bulls have managed to push the price past the important resistance level of 27.90. On a 3-hour chart, it is trading above the 25 and 50-day exponential moving averages. The prior resistance level of 27.90 is currently its support level. I expect the precious metal to rally to 28.23, which was last week’s high. However, it will probably experience some resistance at the psychological level of 28 before moving higher. On the flip side, it may drop to find support along the 25-day EMA at 27.84.