Silver price (XAGUSD) is in a tight range today as investors react to the stronger US dollar. The metal is trading at $26.70, which is below this year’s high of $29.77. Other metals, too, are in the red today, with gold price falling by 0.70% and palladium price falling by 0.50%. Platinum price has fallen by 1.96% while copper has declined by 1.15%.
There are two main reasons why silver price has fallen today. First, data released today shows that the growth of the world economy has started to slow. For example, according to Markit, the manufacturing PMI in Japan increased from 45.2 in July to 46.6 in July. While this was an improvement, it was below 50, which means that the industry is contracting.
Meanwhile, in the Eurozone, the manufacturing PMI declined from the previous 51.8 to 51.7. At the same time, the number of coronavirus cases in European countries like Germany, France, Australia, and New Zealand have been rising. These numbers are important for silver price because of its characteristic as an industrial metal.
Second, silver price is down today because of the stronger US dollar. The dollar index is up by more than 0.54%, mostly because of the reasons mentioned in the first reason. The dollar has gained by 0.67% against the euro, 0.70% against the sterling, and by 0.35% against the Canadian dollar. Silver usually has an inverse relationship with the US dollar.
Silver price forecast
The daily chart below shows that silver price has been in tight range in recent days. The metal has struggled to move above this year’s high of $29.77. It remains above the 50-day and 100-day exponential moving averages. Also, the Relative Volatility Index has dropped sharply in the past few days. The XAGUSD pair has also formed a bullish pennant pattern.
Therefore, I suspect that in the near term, the pair will breakout higher and possibly move above $30. On the flip side, a move below the August 12 low of $23 will invalidate this trend.
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Silver Price Forecast
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