Silver prices are currently trading near $27.20, following positive move in gold prices in the backdrop of dovish comments from Fed and ECB Chair.
Dovish Comments from the Fed were supportive for precious metals demand. Powell said that the U.S. job market remains “a long way from a full recovery”, and called for a broad national effort to get Americans back to work post-COVID-19, during a speech on Wednesday.
Precious metals also found support from dovish comments from ECB President, Lagarde, when she said "we're very far away" from the ECB's current inflation target of just under 2% and the ECB must continue with its accommodative monetary policy.
ECB Governing Council member, Hernandez de Cos, said "ample monetary stimulus continues to be essential", as the Eurozone economic recovery is fragile, and faces downside risks, because of uncertainty about the evolution of the pandemic.
On the economic data front, the U.S. January core CPI rose by only +1.4% y/y, against expectations of +1.5% y/y The Chinese January CPI fell -0.3% y/y, against expectations of unchanged y/y. Also Japan's Jan PPI fell -1.6% y/y. A modest rise in January's U.S. consumer prices is seen, which is positive for precious metals, as used for a hedge against inflation.
However, poor manufacturing data is likely to keep a lid on silver prices. French December manufacturing production fell -1.7% m/m, weaker than expectations of -0.3% m/m, and French December industrial production unexpectedly fell -0.8% m/m, weaker than expectations of +0.4% m/m.
Meanwhile, global demand for silver is expected to rise to 1.025 billion ounces in 2021, according to a report published by the Silver institute, which predicts that purchases of bars and coins would rise to a six-year high of 257 million ounces in 2021. Silver industrial demand will rise 9%, from 2020 levels, to a four-year high of 510 million ounces, and demand for silver for jewellery will rise to 174 million ounces, however it will remain below levels seen before the pandemic. Silver mine production is expected to rise to 866 million ounces in 2021.
Silver prices are likely to trade firm, while above the 100-days EMA at $25.52, while key resistance levels are seen around $27.90 and $28.20 levels.