Silver Prices Forecast: Counter-Trend Buyers Emerge at $22.23 Technical Support

Bullish investors are eyeing potential demand for silver as a safe-haven asset, driven by escalating tensions in the Middle East and fears of a global banking crisis rooted in risky commercial loans.

On the other side, bearish sentiments are bolstered by expectations that the Federal Reserve will continue with high interest rates for an extended period, effectively delaying any rate cuts.

Influential Factors and Events

Geopolitical Tensions

The Middle East’s growing conflict, especially Israel’s military actions in Rafah, could enhance silver’s appeal as a safe haven, a typical response in times of geopolitical strife.

U.S. Dollar Strength and Treasury Yields

The dollar index and the 10-year Treasury yields are on an upward swing, with yields climbing to 4.15%. A stronger dollar typically translates into lower silver prices, as it becomes more costly for holders of other currencies, dampening demand.

Federal Reserve’s Interest Rate Strategy

The Federal Reserve’s cautious approach to reducing interest rates, with fewer cuts anticipated in 2024, directly affects silver. Higher interest rates tend to elevate the dollar and lessen the attractiveness of non-yielding assets like silver.

Impact of Chinese Market Dynamics

The Shanghai Futures Exchange’s closure for the Lunar New Year might temporarily influence silver’s demand, considering China’s significant role in the global silver market.

Economic Indicators and Their Impact

U.S. Jobs Data

The strong labor market, indicated by the decline in unemployment claims to 218,000, reinforces the Fed’s decision to maintain current interest rates, potentially reducing silver’s investment appeal.

CPI Data and Interest Rate Cut Expectations

The upcoming consumer price index report is crucial. The market has reduced the likelihood of a May interest rate cut to 16.5%. Notable adjustments in the CPI could shift the Fed’s policy, impacting silver prices.

Short-term Market Forecast

In the short term, silver prices are poised for volatility. The market’s reaction to the $22.23 – $21.80 support zone and forthcoming U.S. CPI data will be critical. The confluence of a strengthening U.S. dollar, rising Treasury yields, and the Fed’s cautious stance suggests a bearish outlook for silver shortly.

However, escalating geopolitical tensions and unexpected economic data could quickly alter this sentiment. Moreover, silver’s relatively lower price compared to gold continues to offer investment appeal.

Technical Analysis

The intermediate and long-term trends are down, but the marke’s ability to hold a key support zone at $22.23 – $21.88 suggests counter-trend traders are finding value to this current dip.

Continued upside momentum could drive the market into downtrend resistance that has been capping gains since the beginning of 2025. The first resistance is the 50-day moving average at $23.33, followed by the 200-day moving average at $23.39. Look for sellers to re-emerge on the first test of this area.

Conversely, the first support is $22.23, followed by $21.88. If the latter fails to stop the selling pressure, we could see an eventual acceleration into $20.66.