Silver Prices Forecast: XAG/USD on Edge as Traders Await Spark

Silver Prices Flat Amidst Rising Treasury Yields and Stronger Dollar

Silver prices remained nearly unchanged on Wednesday as U.S. Treasury yields saw an uptick and the U.S. dollar strengthened, countering the support derived from geopolitical tensions driving safe-haven demand.

At 11:27 GMT, XAG/USD is trading $27.24, unchanged.

U.S. Treasury Yields Inch Higher as Rate Outlook Evaluated

U.S. Treasury yields experienced a slight increase on Wednesday as investors deliberated over the latest statements from Federal Reserve officials, seeking insights into the future path of interest rates. At 10:08 GMT, the 10-year Treasury yield rose by over 1 basis point to 4.479%, while the 2-year Treasury yield edged up by just over 1 basis point to 4.839%. Investors closely scrutinized remarks from Fed officials regarding the timing and frequency of potential rate cuts, with recent comments aligning with the Fed’s current stance to maintain steady rates until clearer inflation signals emerge.

Fed Officials Signal Caution Amid Rate Cut Speculation

Minneapolis Fed President Neel Kashkari and Richmond Fed President Tom Barkin indicated a cautious approach towards rate adjustments, emphasizing the need for greater confidence in inflation returning to the 2% target before considering rate cuts. Kashkari also acknowledged the possibility of rate hikes, albeit without ruling out rate cuts entirely. Fed Chair Jerome Powell previously stated the Fed’s reluctance to raise rates at the upcoming meeting, adding to market uncertainty.

Market Speculation on Rate Cuts Amid Economic Data Awaited

Investors anticipate further insights into monetary policy as additional comments from Fed officials are anticipated throughout the week. Concurrently, market attention is directed towards key economic indicators such as weekly initial jobless claims and consumer sentiment data, which could influence future rate decisions.

Stronger Dollar Dampens Silver Appeal

The U.S. dollar strengthened, reversing some losses attributed to renewed expectations of Fed rate cuts, thereby diminishing the appeal of silver for foreign currency holders. The uncertainty surrounding the timing and likelihood of rate cuts contributes to market volatility, influencing silver’s attractiveness as an investment.

Geopolitical Tensions Provide Limited Support

While geopolitical tensions in the Middle East and Ukraine typically bolster silver’s safe-haven status, the impact was mitigated by the prevailing market focus on interest rate dynamics and the dollar’s strength. Political developments, including discussions regarding potential NATO intervention in the UK and escalating conflicts in Gaza, add to market uncertainties.

Short-Term Forecast

Silver prices remained subdued amidst rising Treasury yields and a firmer dollar, counteracting safe-haven demand stemming from geopolitical tensions. Market participants await further clarity on the Fed’s rate outlook and key economic data releases to gauge future silver price movements.

Technical Analysis

XAG/USD continues to consolidate near the upper-end of its 3-week range, suggesting a slight upside bias. The trigger point for an upside breakout is $27.73. Taking out this level could fuel a surge into the 50% level at $27.91. Trader reaction to this pivot will determine the near-term direction of silver.

On the downside, the key support is the uptrending 50-day moving average at $25.70. This intermediate trend indicator has been guiding prices higher since March 24. A failure to hold this level could trigger an acceleration to the downside.