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Silver Prices Forecast: Buyers Poised to Challenge 200-Day Moving Average at $23.27

By:
James Hyerczyk
Published: Mar 4, 2024, 12:07 GMT+00:00

Key Points:

  • Potential Fed rate cut driving bullish tone.
  • Long-term trend could turn higher on a trade through 200-day moving average.
  • Short-term trend cautiously bullish as traders await key U.S. labor market data.
Silver Prices Forecast

In this article:

Silver Prices Near Two-Week High

Silver prices hovered around a two-week peak on Monday, bolstered by expectations of a potential interest rate cut from the Federal Reserve in June. Recent U.S. economic data, indicating a softer economy, has fueled this anticipation.

At 11:53 GMT, XAG/USD is trading $23.14, up $0.008 or +0.03%.

Technical Outlook

From a technical standpoint, silver has shown mixed signals. The metal crossed the bullish threshold of its 50-day moving average at $22.94 last Friday. Yet, it faces resistance at the 200-day moving average of $23.27, suggesting an upward intermediate trend but a downward longer-term trend.

Interest Rate Expectations Driving Silver

Interest rate speculation remains a key driver for silver prices. The likelihood of the Fed cutting rates has increased, especially after U.S. manufacturing and construction spending data underperformed, and inflation pressures eased according to the Fed’s preferred gauge. The market is currently pricing in a 74% chance of a June rate cut, up from 65% last week.

Influence of U.S. Economic Data

The silver market is reacting to various U.S. economic indicators. Last week, the release of the personal consumption expenditures price index aligned with expectations. However, January’s consumer and producer price index readings exceeded forecasts, fueling concerns over persistent inflation. Upcoming labor market data and Federal Reserve Chairman Jerome Powell’s testimony could provide further clarity.

U.S. Dollar and Treasury Yields Impact

Silver is also being influenced by movements in the U.S. Dollar and Treasury yields. The dollar index softened slightly, impacted by lower Treasury yields and anticipation of upcoming economic data and Powell’s testimony.

Short-term Market Forecast

Considering the mixed technical signals, evolving economic data, and the anticipation of Fed policy adjustments, the short-term outlook for silver is cautiously bullish. However, traders should closely monitor upcoming U.S. economic releases and Federal Reserve communications for further direction.

Technical Analysis

Daily Silver (XAG/USD)

The intermediate trend turned up last week when XAG/USD crossed to the bullish side of the 50-day moving average at $22.94 on Monday.

The key level to overcome is the 200-day moving average at $23.27. This moving average is a potential trigger point for an acceleration to the upside with $23.55 the next target. Upside momentum will strengthen on a move through this level.

On the downside, crossing to the weak side of the 50-day MA could trigger a steep sell-off.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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