Silver Daily Forecast: Analyzing Bearish Trends Below $28.40 Driven by China’s Economic Slowdown

Market Overview

Silver prices have recently declined, trading around $28.31, with an intra-day low of $28.21. Concerns over China’s economic outlook are mainly fueling this drop. As a key global silver exporter, China’s slowing economy raises worries about reduced industrial demand for the metal.

Bank of America Global Research has revised its GDP growth forecast for China from 5.0% to 4.8% for 2024, highlighting ongoing economic challenges. Weaker industrial usage, combined with the downgraded growth outlook, will likely continue to weigh on silver prices in the near term.

China’s Economic Data Signals Weakness

Recent data from China reinforces the notion of a weakening economy. The Services Purchasing Managers’ Index (PMI) dipped to 51.6 in August from 52.1 in July, underperforming the forecast of 52.2. This downturn indicates a slowing pace of growth in the services sector, which adds to broader concerns regarding the country’s economic recovery.

Bank of America’s revised GDP forecasts, which also downgraded 2025 growth to 4.5%, further highlight the potential for lower demand for silver, especially given China’s significant role in global industrial metal consumption. This economic slowdown puts intense downward pressure on silver prices.

Fed Rate Cut Speculation Offers Silver Support

On the U.S. side, increasing speculation surrounding a Federal Reserve interest rate cut may provide some support for silver. Recent U.S. economic data, including a weaker-than-expected JOLTS job report, has raised the likelihood of more aggressive monetary easing. According to the CME FedWatch tool, there is a 43% chance of a 50 basis points (bps) rate cut at the Fed’s next meeting in September.

Furthermore, market participants are keenly awaiting Friday’s U.S. Nonfarm Payrolls (NFP) report, which is expected to show 161,000 new jobs. A weaker jobs report could lead to a drop in the U.S. dollar, making silver a more attractive option as a non-yielding asset.

Short-Term Forecast for Silver Prices

Silver (XAG/USD) continues to be bearish below $28.40, encountering difficulty in breaking key resistance levels. A breakout above this mark could trigger bullish momentum, while failure may result in declines towards $28.08.

Silver Price Forecast: Technical Outlook

Silver (XAG/USD) is currently trading at $28.31, reflecting a minor increase of 0.15%, yet it still faces considerable resistance around the $28.40 mark, coinciding with a crucial downward trendline. This trendline serves as a barrier to further upside movement and breaking above it is essential for sustaining momentum.

The 50-day Exponential Moving Average (EMA) is positioned at $28.48, which poses additional resistance, while the 200-day EMA at $28.82 implies that the broader trend remains bearish unless these levels are breached. Immediate support is located at $28.08, with further decline possible at $27.78 and $27.44.

A break below $28.08 could lead to additional declines, whereas a break above $28.40 would indicate a potential bullish reversal. Overall, silver remains in a bearish pattern below $28.40, but a breakout could shift market sentiment to a more positive outlook.