Silver price bounced back today as investors waited for the Fed interest rates decision on Wednesday. The price is also reacting to the important jobs data from the United States.
Silver price jumps ahead of Fed
The price of silver tends to move in reaction to the US economy and the decisions by the Federal Reserve. The bank’s monetary policy committee will start its meeting tomorrow and conclude with a decision on Wednesday.
Analysts expect the bank to leave interest rates unchanged at the current range of between 0.0% and 0.25%. They also expect the bank to continue with its pace of asset purchases. So far, the bank has acquired assets worth more than $2 trillion as it attempts to cushion the economy from the crisis.
Still, analysts will be watching the Fed’s reaction to the recent pleasant jobs data from the US. According to the Bureau of Labour Statistics (BLS), the economy created more than 2.5 million jobs in the previous month. This was better than the 8 million decline that was expected by analysts.
Signs of a V-shape recovery
Silver price is also rising as investors continue hoping for a V-shaped recovery. In recent days, economic data from the US and the eurozone showed that the economy is bouncing back, albeit at a slow pace. For example, manufacturing and services PMIs have continued to improve as more countries reopen. For instance, New York, the most-affected state in the United States, will start reopening today.
Reopening is important for silver prices because it leads to increased demand for silver-made products like mirrors and cutlery.
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Silver price technical outlook
On the daily chart, we see that silver price found support at 17.3580, which is along the 78.6% Fibonacci retracement level. The price is also above the 50-day and 100-day exponential moving averages. Most importantly, the reversal is potentially the start of the fifth wave of Elliot Wave. This means that the price may continue rising as bulls attempt to retest the previous resistance at 18.8918.
On the flip side, a move below the 78.6% retracement level will mean that there are more sellers in the market. This could see it drop to the 16.40, which is above the 61.8% retracement level and along the 50-day and 100-day EMA.