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XAGUSD Market Update

11/30/2022 11:04 AM

Silver prices show a weak increase, holding near the level of 21.25. The activity of the "bulls" is gradually decreasing after the growth of the instrument the day before, as a result of which the XAG/USD pair managed to move away from its local lows of November 22. In addition, traders are waiting for the publication of new drivers in the market.

The Beige Book, a monthly report from the US Federal Reserve, will be released today, as well as a speech by the Chair of the regulator, Jerome Powell. In addition, today the markets are waiting for the publication of final data on the dynamics of the US Gross Domestic Product (GDP) for the third quarter. The previous estimate indicated economic growth of 2.6% in annual terms, but some analysts believe that it can be slightly improved to 2.7%. At the end of the week, the November report on the US labor market will be published, which is likely to help the US Federal Reserve decide on the vector of future monetary policy. The next meeting of the regulator will take place in mid-December and at the moment the market is counting on a 50 basis point increase in interest rates. In 2023, the pace of tightening could be revised down to a step of 25 basis points, especially if inflation data confirms the formation of a sustained downward trend.

The metal market is experiencing a period of stabilization. According to the report of the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in silver amounted to 16.8 thousand against 17.6 thousand a week earlier. If one pays attention to the balance of sellers and buyers, then a slight advantage in favor of the "bulls" remains. Buyers still hold the lead in positions with swap dealers having 39.931 thousand against 35.289 thousand for the "bears". This week, sellers reduced their contracts by 3.312 thousand, while buyers increased their number by 0.563 thousand.

More confident growth of silver is hampered by alarming statistics from China, where industrial activity continues to decline amid the aggravation of the situation with coronavirus restrictions. The National Bureau of Statistics (NBS) Manufacturing PMI in November fell from 49.2 points to 48.0 points, which was significantly worse than analysts' expectations at 49.0 points.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is declining keeping a weak sell signal (located below the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its lows, indicating the risks of oversold silver in the ultra-short term.

Resistance levels: 21.42, 21.64, 22.00, 22.21. | Support levels: 20.83, 20.55, 20.30, 20.00.

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