Silver (XAG/USD) Crosses $24.00 Resistance After Weak PMI
Silver (XAG/USD) spot prices jumped higher after the release of a weak PMI reading. After the results, the Silver bulls successfully crossed the $24.00 resistance zone, which signifies that funds moved away from the greenback.
The PMI reading for August was below the 49.0 reading in July as well as the 49.3 expectation set by Wall Street. The actual reading turned out to be around 47.0, which surprised most of the experts.
In addition, the Services PMI also went lower from 51.0 last month to around 51.0 in August. Wall Street was expecting the Services PMI to be around 52.2 while the actual value was around 1.1 lower.
According to experts, the recent PMI reading is an indication that the tight monetary policy of the Fed is deteriorating the economy. In the past, the Federal Reserve adopted a very aggressive policy and pushed the interest rate in the range of 5.25% - 5.50%.
Although this allowed the Fed to lower the inflation in the USA, the end result was the deterioration of the other economic indicators, such as the PMI and the services PMI.
US Dollar Index Turns Lower
After touching the 104.00 level, the US Dollar Index retreated and was last seen near 103.50. Similarly, the 10-year US bond yield also turned lower to around 4.23%.
Looking ahead, the focus will be on what Jerome Powell has to say about the state of the US economy as well as what actions are needed. For the most part, Powell is expected to highlight the importance of high interest rates and why they will not change the policy.
The technical analysis of the Silver chart reveals that the prices are already trading higher than the 61.8% fib level. In addition, 20 SMA is showing an upward slope and is present near $23.00, which is a sign of a strong bullish trend.
Furthermore, the RSI (14) indicator is hovering in the 60 to 80 range which is a sign of bullish pressure and hints at more upside.