Silver is trading just above the 17.00 level, as the Phase 1 agreement between China and the U.S. has not ignited any fervor among investors.
Silver prices have edged higher on Tuesday. In the European session, silver is trading at $17.07, up 0.26% on the day.
Lukewarm Response to Trade Agreement
The announcement of a trade deal between the U.S. and China is certainly significant, but the markets have been rather cautious in their response. The agreement is the first breakthrough in a bitter trade war that has lasted over two years and dampened global growth. The agreement is a welcome development, but is only a first step towards resolving the trade war between the world’s two largest economies.
It was noteworthy that Chinese and U.S. representatives held separate press conferences on Friday. President Trump said that China would buy $50 billion worth of U.S. farm products, but no timeline or further details were provided. Indeed, the Chinese didn’t mention any specific targets at their press conference. Even with the agreement, the U.S. will continue to impose 25% tariffs on $250 billion of Chinese imports, along with a 7.5% tariff on another $120 billion of Chinese products. Still, there was some relief on the part of investors as another round of U.S. and Chinese tariffs that were scheduled to take effect on December 15th were suspended.
Manufacturing, Services PMIs Head Higher
The week started on a positive note in the U.S., as manufacturing and services PMIs accelerated in November. The manufacturing PMI improved to 52.5, up from 52.2 pts. This is the fourth month that the PMI has headed higher. On the services front, the PMI climbed to 52.2, up from 51.6 pts. Both indicators were within expectations and pointed to slight expansion.
Silver Technical Analysis
Silver continues to grind upwards and has recovered from the sharp losses seen in early December. The silver price forecast remains neutral. On the upside, the 50-EMA is at 17.14, just below resistance at 17.25. On the downside, we find immediate support at 16.95. This is followed by the 200-EMA, at 16.73. Below, there is support at 16.50, which has held since August. Note that the 61.8% Fibonacci retracement level follows immediately at 16.41. This means that there are significant support barriers below the 17.00 level.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
