The price of silver wiped out some of the gains from last week on Monday, as the market is reacting to the low Chinese data. The gains made by the US dollar in the first week this week is also in the way of the commodity its price fluctuation is based on its dual status as a valuable and industrial metal.

Which factors are driving market activity?

The data released earlier on Monday revealed that Chinese industrial production rose by 3.8 percent in July when in comparison to the same period last year. In addition, it increased in a slower pace when compared to the prior month's 3.9% an d forecast 4.6%. Additionally retail sales in the second-largest economy grew by 2.7 percentage YoY, which is a decline from the prior month's 3.1 percent. Also, it was below economists' estimate of 5.0 percent.

The newly released Chinese data indicate that the country's national demand for silver remains low. Given that it is true that the Middle Kingdom is the leading user of silver as well as various industrial metals. Investors are concerned about whether the rate cuts will help boost the silver prices in the coming weeks. In the last week, China's People's Bank of China reduced its lending rates for medium-term loans by 10 basis points. This is, in fact, the first time that rates have been cut since January. This is in an effort to boost economic growth, as the housing market crisis and COVID-19 lockdowns weigh on the economy.

Silver price is being impacted by the increasing US dollar. As at the time of writing the dollar index was at $106.18; up by 0.48 percent. Like other dollar-priced commodities, a surge on the price of greenback can make silver more expensive for buyers who hold other currencies.

Silver price prediction

silver price edged lower during the Monday session, but it remains over the psychologically critical value of 20.00. As seen on the daily chart, it's trading in the vicinity of the 25 and 50-day exponentially moving averages. While these technical indicators point to further gains, I am not bullish on its movements in the near term.

In particular, the gap from Monday's intraday peak that was 20.89 and the 50-day EMA at 20.34 is worth watching. A pullback past the lower border of the horizontal channel will see bulls defend the vital resistance zone at 20.00, which is along the 25-day EMA.

Even if the bulls are able to break the resistance on the upper limit of the range, the psychological level of 21.00 will likely to remain a steady resistance zone in the short-term. A rise above this mark will negate this idea.