Silver prices (XAG/USD) are trading flat but with a slight bearish tone this Friday, as the white metal struggles to hold on to the $26 mark.
A lower close to the week looks certain as bears control the market for the third day running. The weakness in silver prices on the day follows a strong showing by the US Dollar across a basket of assets. This showing has manifested in the 0.28% gain in the USD Index, even when the long-term bond yields struggle this Friday.
Concerns about industrial recovery amid the coronavirus pandemic continue to linger, especially as business conditions around manufacturing in China showed evidence of a slowdown. China’s manufacturing PMI came in at 51.1, which was lower than last month’s 51.9 and much less than the projected outcome of 55.9.
This morning also saw the release of underwhelming data for the Eurozone economy. The German preliminary GDP figure came in at -1.7% (versus consensus of -1.5% and previous of 0.3%), thus topping off disappointing numbers.
Technical levels to watch
The breakdown move of the active daily candle is in progress and puts the lower edge of the channel and the 26.034 support level at risk. A successful breakdown allows the 25.386 support level to come into view, with 25.00 and 24.569 lining up as initial downside targets. Below these levels, 24.00 forms another pivot for support, being the ceiling of the demand zone on the daily chart.
On the flip side, a bounce at the current level, stemming from an unsuccessful breakdown of the channel’s lower border, allows the bulls an opportunity to dash 26.325 initially, with 26.624 and 26.868 serving as the upside barriers before price attempts to push beyond 27.00. This move would eye 27.502 as an additional target.