The dollar index bounced from yesterday’s low of 89.65 and currently trading near 90.14, sharp recovery in the dollar index against other currencies has pushed precious metals prices down. Silver is currently trading near $27.815 which is sharply lower than yesterday's high of $28.698.
However, an increase in global manufacturing activity is bullish for industrial metals and supportive of silver prices.
On the economic data front, The US May manufacturing index was stronger than expected. Also, the China May Caixin manufacturing PMI rose +0.1 to a 5-month high of 52.0. In addition, the Eurozone May Markit manufacturing PMI was revised upward to 63.1 from the previously reported 62.8, the strongest pace of expansion since the data series began in 2018. Finally, the Japan May Jibun Bank manufacturing PMI was revised upward to 53.0 from the previously reported 52.5.
Inflation expectation is likely to keep precious metals under pressure as global central banks may pause some Covid-19 relief funds to control the inflation. Eurozone May CPI rose +2.0% y/y, slightly stronger than expectations of +1.9% y/y and the fastest pace of increase in 2-1/2 years.
However, comments from St. Louis Fed President Bullard are likely to keep precious metals under pressure. He said the US jobs market is "tighter than it looks" and the Fed is close to launching a discussion about tapering its $120 billion-a-month asset purchase program.
According to the CFTC Commitments of Traders report for the week ended May 25, net long for silver futures dropped by 499 contracts to 50482 for the week. Speculative long position dropped by 621 contracts, while shorts dropped by 128 contracts.
Silver prices are likely to find immediate support levels near 20 days EMA at 27.709 and 50 days EMA at 27.188 while immediate resistance levels are seen near $28.454 and $28.966