Silver to continue negative trend while below key resistance level of $25.86
Silver prices drifted lower after a rally from yesterday’s low of $23.74, rally in stock and bond yield is likely to keep precious metals prices lower.
However stronger Chinese economic data is likely to provide support to industrial metals and silver prices. Industrial metal demand also found support from President Biden's $2.25 billion infrastructure plan will boost economic growth in the region.
On the economic data front, The U.S. March MNI Chicago PMI rose +6.8 to 66.3, against expectations of 61.0 and the fastest pace of expansion in 2-1/2 years, which is bearish for gold but supportive for industrial metals demand and silver prices. Also, Feb pending home sales fell -10.6% m/against expectations of -3.0% m/m.
Meanwhile, silver prices found support from stronger Chinese economic data. China's Mar manufacturing PMI rose +1.3 to 51.9, stronger than expectations of 51.2. Also, China's Mar non-manufacturing PMI rose +4.9 to 56.3, against expectations of 52.0.
Bullion found support from Dovish ECB comments when ECB President Lagarde said the market could test the ECB's resolve "as much as it wants," but policymakers won't shy away from using all of its tools should the market try to push bond yields higher. Also, ECB Governing Council member Rehn said, "inflation threatens to remain too slow in the Eurozone."
However, recovery in US bond yield is likely to keep a cap on prices. 10-year T-note yield on Wednesday rose +2.3 bp to 1.725%, and currently trading near 1.73%, just below Tuesday's 14-month high of 1.774%. Higher T-note yields are bearish for gold prices since higher yields may prompt investors to liquidate their non-interest paying long gold positions and move their funds into government debt.
Silver and other industrial metals demand is likely to remain negative due to rapidly expanding Covid cases in Eurozone and India. The overall number of global Covid-19 cases surpassed 128.7 million, while the deaths have surged to more than 2.81 million, according to Johns Hopkins University.
Silver prices are likely to trade negatively while below the key resistance level of 20 Days EMA at $25.38 and 50 days EMA at $25.86. It may find immediate support near the recent low of $23.74 and $23.16