Silver Prices Drop Over 2% Amid Recession Concerns and Economic Data

On Thursday, August 1, spot silver experienced a significant drop, declining more than 2% during the trading session. According to FXStreet analyst Christian Borjon Valencia, the fall in silver prices was driven by recession fears and increased risk aversion among investors. The failure of silver to close above $29.00 per ounce contributed to the bearish momentum.

Spot silver ended Thursday's session with a 1.6% decrease, settling at $28.52 per ounce. Earlier in the New York session, silver prices briefly rose to $29.14 per ounce. However, following the release of U.S. economic data, prices dropped sharply, reaching a low of $28.21 per ounce.

The U.S. Department of Labor reported an increase in initial jobless claims, which rose by 14,000 to 249,000 for the week ending July 27. This figure was higher than the median forecast of 236,000. Additionally, the Institute for Supply Management (ISM) reported that the manufacturing index fell to 46.8 in July, indicating a contraction in industry activity. This marked the fourth consecutive month of contraction, with the latest data coming in weaker than expected.

Valencia suggests that the outlook for silver has turned neutral, with prices falling below the 100-day moving average of $28.61 per ounce, indicating weakness on the long side. If silver prices drop below $28.00 per ounce, they may challenge the recent cycle low of $27.31 per ounce, set on July 29. Further weakening could see sellers targeting the 200-day moving average at $25.98 per ounce.

On the upside, if silver manages to rise above $29.00 per ounce, the next resistance levels will be the 50-day moving average at $29.86 per ounce and the psychological level of $30.00 per ounce.

As of 08:40 GMT, spot silver was trading at $28.45 per ounce.