Silver Price News: Silver Falls On Weak Manufacturing Data

Silver prices fell sharply on Thursday, giving up the previous day’s gains, as disappointing manufacturing data prompted questions over industrial demand for the metal.

Prices fell as low as $28.25 an ounce on Thursday before recovering to $28.50 an ounce later in the day. That compared with around $29.10 in late deals on Wednesday.

The market took a dim view of the latest Caixin manufacturing PMI figures from China released Thursday, which showed a contraction in July among privately-owned companies, against market expectations of an expansion. As one of the world’s largest consumers of silver, any slowdown in manufacturing in China represents a bearish demand signal for the grey metal.

The figures followed Wednesday’s official NBS manufacturing PMIs for China, which relate to larger state-owned companies, and these also showed a slight decline in July, representing a third straight month of contraction in factory activity.

Compounding this effect, US ISM manufacturing PMI figures for July released on Thursday also showed a more acute drop than the market had expected. While gold tends to benefit from economic uncertainty, silver can react negatively as roughly 50% of demand for the metal comes from industrial consumption.

Silver prices have shown a clear downward trend since late May, and eyes will be on the range of $27.00 to $27.50 an ounce to see if buy-side support will kick in to break this descending price channel. Looking ahead, the markets will be watching out for the US non-farm payrolls figures for July on Friday as well as the July unemployment rate and factory orders for June.