Silver price is up for the sixth consecutive day as traders react to the strong industrial production data from China and the overall weaker US dollar. The metal is trading at $24.90, which is almost 10% above this month’s low of $22.60.
In a report earlier today, China’s statistics bureau said that the country’s industrial production continued to do well at the beginning of the fourth quarter. In total, industrial production increased by 6.9% in October, which was slightly higher than 6.5% that a panel of experts were expecting. That pushed the year-to-date production to 1.8%.
Other sectors of the economy also continued doing well. Retail sectors rose by 4.3% while fixed asset investments increased by 1.8%.
These numbers are important for silver prices because, unlike gold, the metal is usually an industrial metal. It is used in the manufacture of many products, including solar panels and mirrors. Also, China is the biggest market of silver products. Therefore, a combination of higher industrial production and higher retail sales is usually a good driver of its prices.
Silver price is also rising today because of the overall weaker dollar and the general rally of major assets today. The US dollar index, which is a gauge of the performance of the greenback, is down by 0.15% today as risk-on investors move to other currencies. Since silver is usually traded in dollars, a weaker greenback is usually positive for the metal.
Also, silver tends to gain when the overall market is rising. Today, most global stocks are in the green, with the Dow Jones and S&P 500 index futures rising by almost 1%. The same is true in Asia and Europe, where the DAX index and Nikkei rose by more than 1%.
Silver price technical outlook
On Friday last week, I wrote that the silver price was about to break-out and mentioned that the key levels to watch would be $22.5797 and $25.9535. While the two are still levels of interest, the initial argument was wrong.
That is because, as shown in the daily chart below, the price has formed an ascending channel that is shown in green. At the current price of $24.90, the metal is slightly above the lower side of the channel. Therefore, the most likely scenario is where the price continues rising as bulls target the upper side of the channel at $26.00. That implies an almost 5% upside from the current price.
On the other hand, a move below the lower side of the channel at $24.00 will invalidate this trend.
Silver technical chart