Silver Prices Forecast: Sellers Eyeing Pullback into 50-Day Moving Average

Price Movements

Silver prices experienced a significant downturn, reaching a two-week low on Tuesday, prompted by reduced tensions in the Middle East and subsequent profit-taking actions by investors. This follows a robust rally that had previously pushed silver prices to $29.80 on April 12, marking a multi-year high. The sharp decline on Monday marked the largest single-day drop in several months, resetting expectations and investor positions in the market.

At 11:28 GMT, XAG/USD is trading $26.93, down $0.26 or -0.97%.

On-Going Correction Phase

From a technical standpoint, silver could be headed for a crucial support zone ranging between $25.11 and $23.75. The ability of silver prices to maintain above this level could indicate that the current pullback is merely a minor correction within an overarching bullish trend. This correction phase is viewed by market analysts as necessary for evaluating the true underlying demand for silver, beyond short-term trading momentum.

Market Sentiments and Economic Data

The broader economic context also plays a significant role in silver’s trend. U.S. Treasury yields showed minimal movement as markets awaited upcoming economic data releases, which are expected to provide further clarity on the economic direction and influence Federal Reserve policy decisions. Notably, this includes key indicators such as the personal consumption expenditures price index and GDP growth rates.

Short-Term Forecast

Looking ahead, silver’s outlook remains cautiously bullish. The recent influx of $104 million into physically-backed gold ETFs, often a bellwether for similar precious metals like silver, suggests a returning investor confidence in these assets. Moreover, the resilience of the U.S. economy and persistent inflation may limit the extent of interest rate reductions, potentially bolstering the appeal of non-yielding assets like silver.

Investors will closely monitor this week’s economic data, which could reinforce the current support levels and strengthen the case for a sustained uptrend in silver prices. The ongoing evaluation of Fed policies and the interplay with macroeconomic indicators will be critical in shaping market expectations and the subsequent movements in silver markets.

Technical Analysis

XAG/USD’s correction mode is continuing on Tuesday with traders eyeing several potential downside targets and potential value spots at $25.11 to $23.75. The 50-day moving average at $25.11 is another potential target. It has been controlling the intermediate uptrend since March 4. The major support remains the long-term trend indicator or 200-day moving average at $23.75.