- Silver prices give back some of last week's gains.
- The very short-term trend is bearish below this London morning's high of $17.70.
- There are no key data reports on deck today.
Silver prices were correcting against a multi-day bullish trend at the time of writing.
Prices reached a high of $18 on May 2 and created a new lower swing low at the $17.70 level this London morning. This leaves the very short-term tend bearish since May 2. However, for now this is a short-term trend within a longer-term bullish trend.
The longer-term trend is bullish above the April 27 low of $17.03 as it is a higher swing low in relation to the April 21 swing low of $16.73. It could be that prices may turn a bit choppy when the two trends meet.
The next short-term support level could be the April 27 high of $17.40, followed by the April 27 low of $17.03 and the April 21 swing low of $16.73. Short-term resistance levels are this morning's high of $17.70, followed by last week's high of $18 and the 2015 high of $18.46.
Drivers of price action as of late have been a soft USD and softer stock markets, which has kept precious metals such as silver and gold supported.
Yesterday, the U.S. ISM Manufacturing index slipped to 50.8 from 51.8 and below the economist consensus estimate of 51.4. This highlights that the manufacturing sector is indeed soft, something which the Fed already pointed out as a trouble spot for the U.S. economy. On the other hand, the inflation gauge of the ISM indicator, ISM Prices Paid, rose to 59 from 51.5 and beat the 52.0 expected. This strong rise to Prices Paid may hint of higher than expected inflation in the U.S. economy and could pose a dilemma for the Fed; should the focus on sluggish growth hold back any rate hikes or should the approach be one of combating rising inflation? This is an important question for silver prices as historically a move toward a rate hike has often softened silver prices whilst the USD has gained.
Silver Price | CFD: XAG/USD
Created with Marketscope/Trading Station II ; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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