Silver Price Analysis: XAG/USD advances to near $23 on China’s dovish stance, US Q4 GDP eyed
|- Silver price jumps to near $23, supported by PBoC’s dovish stance.
- The US economy is expected to grew by 2% in the fourth quarter of 2023.
- Silver price looks set to deliver a breakout of the Inverted H&S pattern.
Silver price climbs to near $23 after the People’s Bank of China (PBoC) announced a liquidity booster to uplift the economy that is struggling to recover post-pandemic. The PBoC is set to infuse liquidity of $140 billions into the banking system to support vulnerable economic growth.
S&P500 futures have generated some gains in the European session, portraying a risk-on mood. 10-year US Treasury yields have dropped to near 4.16%. The US Dollar Index (DXY) falls slightly to near 103.20 as investors shift focus towards the United States Q4 Gross Domestic Product (GDP) data, which will be published at 13:30 GMT.
As per the preliminary consensus, the US economy grew at a slower pace of 2.0% after expanding 4.9% in the third quarter of 2023. A slower growth rate would undermine the argument supporting a restrictive interest rate policy atleast until second quarter ends.
The hopes for an interest rate-cut by the Federal Reserve (Fed) has already eased significantly as the US economy is resilient on the grounds of labor market and consumer spending. • As per the CME Fedwatch tool, chances in favour of an interest rate cut by 25 basis-points (bps) have dropped to 42.4%.
Silver technical analysis
Silver price aims to deliver a breakout of the Inverted Head and Shoulder chart pattern, formed on a two-hour scale. The neckline of the aforementioned chart pattern is plotted from January 17 high at $22.88. The 50-period Exponential Moving Average (EMA) around $22.60 continues to provide support to the Silver price bulls.
The 14-period Relative Strength Index (RSI) has shifted into the bullish range of 60.00-80.00, which indicates that an upside momentum has been triggered.
Silver two-hour chart
(This story was corrected on January 25 at 12:42 GMT to say that US GDP data is expected to show the economy grew by 2% in the fourth quarter not the third quarter).
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