Silver continued to trade within a tight range, holding off the daily triangle formation following an upbeat China manufacturing report and Federal Open Market Committee (FOMC) minutes. The sentiment remains bullish due to Higher High (HH) in the recent upward rally.
As of this writing, the white metal is being traded around $19.48 an ounce. A support may be noted near $19.45, the lower trendline as demonstrated in the following chart. A break and daily closing below the trendline will push the precious metal into bearish territory, opening doors for the double bottom support area.
On the upside, the white metal is likely to face a hurdle near $19.78, the upper trendline resistance. An upside breakout through the daily triangle will open doors for the $22.00 handle in the long run.
Manufacturing in China—the largest consumer of gold and silver—remained better than expectations during May with 49.7 points reading as compared to 48.1 points in the month before, a report by the HSBC Holdings revealed on Wednesday. Better than expected Manufacturing Purchasing Managers Index (PMI) report is seen as bullish for Silver and vice versa.
US Monetary Policy Outlook
The Federal Open Market Committee (FOMC) policymakers advocated for a clear explanation on the forward guidance stance after a major dip in the US unemployment rate which fell from 6.6% to 6.3% in April, the lowest level since the recession of 2008. The policymakers wanted the Fed to give a timeframe for the first rate hike, the development was seen as dovish for the US Dollar (USD).
The overall fundamental outlook coupled with the recent supply concerns about Silver will continue to act as a major support for the white metal, thus we do not expect a major correction in the price of white metal anytime in the near future.