Silver prices have recovered from early losses and posted moderate gains yesterday. Silver prices are now trading near $26.85 moderately higher from the recent low of $25.82. Dovish central banks comments, weakness in the dollar index have supported the positive move in silver.
Global economic data on Tuesday were bearish for silver and other industrial metals. German January retail sales unexpectedly fell -4.5% m/m, against market expectations of +0.3% m/m. German February unemployment unexpectedly rose +9,000, showing a weaker labour market than expectations of a decline of -10,000.
Additionally, Japan Q4 capital spending fell -4.8% y/y, against expectations of -2.0% y/y. Finally, Japan Q4 capital spending ex-software fell -6.1% y/y, against expectations of -3.0% y/y.
However, precious metals found support from dovish Fed comments. Fed Governor Brainard said, "The economy remains far from our goals in terms of both employment and inflation, and it will take some time" before the Fed begins tapering bond buying. Also, San Francisco Fed President Daly said the Fed needs to be "patient" in its new policy strategy going forward and support the economy by "avoiding pre-emptively tightening monetary policy."
Dovish comments from ECB also supported the positive move in gold and silver after he said that officials are "totally open" to recalibrating the asset-purchase program, including the Pandemic Emergency Purchase Program (PEPP) envelope. Also, ECB Executive Board member Panetta said, "we are already seeing undesirable contagion from rising U.S. yields into the Eurozone yield curve, which is unwelcome and must be resisted. Bond yield has retraced back a little after his comments and supported bullion.
Silver prices are likely to trade firm while above the key support level at 100 days EMA at $26.15 and 200 days EMA at $24.58 while immediate resistance level is seen around $27.72 and $28.46