The drop in US industrial production was enough to cause silver prices, already under pressure along with gold this Friday, to drop 2.51% as at the time of writing. US industrial production for July 2020 grew 3.0% on a month-on-month basis. This fell short of market expectations (3.1%) and also represented a 47.4% drop from the previous number of 5.7%, indicating a slower improvement in factory production.
Capacity utilization for industries grew by 2.1% in July to 70.6%, a fraction above the market expectation of 70.3% and also slightly higher than the previous figure of 68.5%. The markets deemed these figures unimpressive enough to warrant the maintenance of a bearish stance on the white metal.
Silver is an industrial metal, and its price is sensitive to manufacturing and industrial data. Silver price experienced its worst single-day drop in 12 years on Tuesday, dropping by nearly 15% on that day. Price action recovered somewhat but looks set to end on a low this week. Following last week’s 16% ascent, silver is down nearly 5% for the week.
Technical Outlook for Silver Price
The price candle for the day is off its intraday lows, which were found at the 26.325 support line (12 August high in role reversal). If silver price action sees momentum from the bounce and pushes to the upside next week, we could see a push towards the 28.073 resistance, with 29.919 (7 August high) lining up as potential further upside target.
On the flip side, an extension of the bearish sentiment of today into next week could pressurize the white metal, primarily as the price action of yesterday and today represent lower highs from the 6-10 August highs. A break of the 26.325 support targets the 24.661 support, with 23.027 and 21.332 lining up as distant downside targets.
XAGUSD Daily Chart