Silver price (XAGUSD) spiked today as investors reacted to a weaker dollar and stronger manufacturing PMI data from China. The price also broke out from its triangle pattern as I will explain below.
Silver price has been in consolidation in recent weeks after it reached a multi-year high of $29.84. Since then, it dropped to a low of $23.46 and has been struggling to pare back those losses.
Today, the price is up because of the weaker dollar. The dollar index has declined by more than 0.30% because and is trading at the lowest level in more than 2 years. The dollar is also lower against most developed countries currencies than the euro and sterling.
It is also weaker than many emerging market currencies like the South African rand and Mexican peso. As I have written before, silver is usually priced in dollars, meaning that it has an inverse relationship with the currency.
Silver price is also rising because of the stronger manufacturing PMI data from China. According to Markit and Caixin, the manufacturing PMI increased from the previous level of 52.8 to 53.1. Another data by China Logistics yesterday showed that the PMI was at 51.0. These numbers show that the Chinese economy is continuing to recover, which is a positive thing for silver because of its role as an industrial metal.
Silver price technical forecast
A look at the daily chart shows that silver price is up for the past three consecutive days. And the gains are continuing, meaning that more buyers are coming in. Importantly, the price has moved above the ascending triangle pattern, which is also another bullish factor. Meanwhile, the price remains above the 50-day and 100-day exponential moving averages.
This means that the upward trend is likely to continue as bulls aim for the next resistance level at $29.84. On the flip side, a move below the ascending line of the triangle patter will send a signal that there are more sellers in the market. This will see the price continue falling.