Silver Price Forecast: XAG/USD rises after weak US Manufacturing PMI
|- XAG/USD stands with nearly 0.50% gains near $22.90 after reaching a daily high of $23.70.
- US Manufacturing PMI fell to 46 in June, a contraction worse than expected.
- Falling US Treasury yields gave room for the precious metal to rise.
Silver prices (XAG/USD) are rising, showing gains of approximately 0.70% and trading near $22.90, following a surge that led to a daily high of $23.70. This upward momentum comes in response to the weak US Manufacturing Purchasing Managers' Index (PMI) for June, which recorded a contractionary figure of 46, falling short of expectations. The decline in US Treasury yields has allowed the precious metal to advance, although it is worth noting that yields are still in positive territory, which can limit the XAG/USD’s upside potential.
US reported weak Manufacturing PMI; yields hold their ground
The most recent release of the Institute for Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) for June revealed a reading of 46, falling short of the expected 47.2 and the previous figure of 46.9.
Despite a broad retreat in US yields (which could be seen as the opportunity cost of holding Silver), the Federal Reserve's (Fed) hawkish expectations for July have remained firm. The CME FedWatch Tool indicates that a 25 basis points (bps) hike in the upcoming July 31 meeting is practically priced in, while the likelihood of another 25 bps hike in 2023 has increased to around 40%. Furthermore, market participants eagerly await the release of Non-Farm Payroll (NFP) data on Friday, as it will continue shaping expectations regarding the Fed's future decisions.
That being said, it's worth noticing that higher interest rates tend to weaken precious metal prices, so traders should be aware that a hot NFP reading may trigger further downside for the XAG/USD.
XAG/USD Levels to watch
According to the daily chart, the technical outlook for the XAG/USD remains neutral with a bearish bias. The 20 and 100-day Simple Moving Averages (SMAs) are about to perform a bearish cross while indicators remain in negative territory.
If the metal continues to gain ground, resistance levels to consider are seen at the daily high of around $23.05, followed by $23.10 and the mentioned bearish cross at $23.30. Conversely, support levels are seen at the $22.80 level and below at the 200-day SMA at $23.55 and the $23.55 area.
XAG/USD Daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.