Silver prices were a tad lower today on upbeat Chinese PMI data, which helped to introduce risky sentiment into the market on Monday. Thus, XAGUSD was unable to continue its recovery move of Friday and fell along with gold, as Chinese Manufacturing PMI data came in slightly better than market expectations.
Today’s data releases were made all the more important by the fact that it is the first time in 7 months that China’s manufacturing PMI has shown a growth in manufacturing, edging up to 50.2 in November. This was an improvement by 0.8 over the previous month’s figure.
China’s Caixin Manufacturing PMI was also slightly better than the previous month’s figure of 51.7, as it came in at 51.8 and trumped market expectations which had projected yet another monthly drop.
Silver continues to trade at 16.92 (as at the time of writing), remaining just shy of the 17.00 psychological resistance. The white precious metal continues to remain in broader consolidation within the bearish flag formation. Today’s downward push is now testing the lower border of the flag on the daily chart.
The expectation is for price to break below the bearish flag and extend the move down well below $16. However, risk sentiment from more Chinese data as well as the happenings on the US-China trade front look to dominate headlines this week. Also, we have key data from the US, including the last edition of the Non-farm Payrolls for the year.
A break below the bearish flag looks set to target the first support target at 16.62 (previous highs July 24/25 in role reversal, as well as previous lows of August 13 and November 12). Further support lies at 16.19 (previous double top of January 30 and February 20 as well as low of July 21/23) and this may become relevant if the measured move from the bearish flag has the right momentum behind it.
On the flip side, return of risk-off sentiment could push XAGUSD above the consolidation flag area, which invalidates the pattern and targets a recovery to 17.52 (August 13 high) and 18.25 above it (September 11 and November 4 highs).More content