Silver price has staged a strong comeback in the past few days as investors continued to buy the dip. It has risen in the past five days straight and the movement is gaining momentum. It jumped to $30.50 on Wednesday, its highest point since June 21st.
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Commodities are soaring
Silver’s rally has also triggered a big movement in exchange-traded funds (ETF) that track the metal like the iShares Silver Trust (SLV), abrdn Physical Silver Shares (SIVR), and Global X Silver Miners ETF (SIL).
The metal’s jump also coincided with the ongoing recovery of other commodities. Gold, the best-known precious metal, rose by 1.50% to $2,370 while Brent, the global oil benchmark, rose to $87.
Other commodities like copper, natural gas, platinum, and palladium have also jumped in the past few days.
This recovery is mostly because the global economy is doing modestly well. Data released this week showed that the manufacturing activity in China, Europe, and the United States made a modest improvement in June.
The same trend happened on Wednesday when S&P Global published strong composite PMI numbers. In the UK, the PMI figure rose to 52.3 while in the US, it moved from 54.5 in May to 54.8 in June.
Silver and other industrial metals do well when the global economy is thriving since it signals elevated demand.
Weak US jobs numbers
It also rallied after the US published weak jobs numbers on Wednesday. According to the Bureau of Labor Statistics (BLS), initial jobless claims came in at 238k last week, missing the expected 234k. Continuing claims rose to 1.85 million, a figure that was higher than the median estimate of 1.84 million.
According to the ADP, the private sector created 150k jobs in June, a lower number than the expected 163k. The number came two days ahead of the upcoming official nonfarm payroll data.
Weak US jobs numbers are seen as being positive for the price of silver because of their impact on the Federal Reserve. The Philps Curve suggests that inflation falls as the unemployment rate rises, a move that could accelerate the Fed’s plan to start cutting interest rates.
In a statement on Tuesday, Jerome Powell noted that the Fed appreciated the recent drop in consumer inflation. The bank will determine whether to cut rates if inflation continues falling to the key target at 2.0%.
Other central banks have started to slash interest rates recently. The European Central Bank (ECB) cut rates by 0.25% in its last meeting and has signaled several more cuts in the next few months.
Other banks like the Bank of Canada (BoC), Swiss National Bank (SNB), and Riksbank have also started slashing rates. Silver and other precious metals rise when these banks are slashing rates.
Silver price forecast
The weekly chart shows that the price of silver has done well in the past few months as demand for the metal rose. It soared and reached the year-to-date high of $32.50 in May and then pulled back to $28.55.
Silver has now bounced back and moved above the key resistance point at $30, a psychological level and also the highest point in February 2021. It has also risen above all moving averages, which is a positive sign.
Oscillators like the Relative Strength Index (RSI) and the MACD have also pointed upwards in the past few weeks. Therefore, silver price will likely continue soaring as buyers target the next key resistance point at $32.50.
If this happens, it means that the metal will rise by 6.70% from the current level. The same will happen among other silver ETFs like SLV and SIVR.
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