Silver's Pullback Amid Economic Signals: Navigating PCE Data and Market Trends

Silver showed a minor pullback after US PCE data. It hit a low of $28.74 and currently trading around $29.24.

PCE Data

On December 20, 2024, the Core Personal Consumption Expenditures (PCE) Price Index for November showed a 2.8% increase from the previous year, matching expectations but slightly down from earlier months. The monthly change was a small rise of 0.1% from October to November, indicating low inflation pressure. Although the annual inflation rate is above the Federal Reserve's target of 2%, it is lower than the 2.9% analysts predicted. This report follows the Federal Reserve's recent decision to cut interest rates by a quarter percentage point to a range of 4.25%-4.50%. The data is important as it helps guide the Fed's decisions on future interest rate adjustments based on inflation trends.

Strong Economic Signals as 2024 Ends

Recent data indicate a strong economy, with the GDP growth rate revised to 3.1% for the third quarter, showing healthy economic growth. A higher GDP reflects increased production of goods and services in the country, which is promising news.

Job Market Stability Boosts Consumer Confidence

Additionally, there has been a drop in initial jobless claims, meaning fewer people are applying for unemployment benefits. This suggests that more people are retaining their jobs or finding new ones, indicating a strong job market. With more jobs, people tend to spend more, further boosting the economy.

Mixed Signals from the Manufacturing Sector

On December 19, 2024, the Philadelphia Federal Reserve's Manufacturing Business Outlook Survey revealed a significant decrease in manufacturing activity. The Philly Fed Manufacturing Index dropped to -16.4 for December, with new orders and shipments also declining. While the employment index remained positive, the slowdown in hiring indicates challenges in the sector, which could impact overall economic growth as we enter 2025.

Key Trading Levels for Silver

For trading strategies, the major level to watch for silver is $30. The current position below key moving averages has near-term support at $28.40. If silver falls below this support, it could target levels of $27.70, $27.15, and $26.85. Conversely, immediate resistance is at $30, with potential targets at $30.75, $31.25, and higher.

Strategic Trading Advice Amid Market Conditions

Given the current market outlook, a good trading strategy would be to buy on dips in the $29.70-$29.75 range, setting a stop-loss at $28.70 and targeting a price of $26.85.