Silver Prices Forecast: Softening US Economic Data Boost XAG/USD’s Allure

Highlights

• Silver hits a four-week peak, amid soft economic signs and Federal Reserve rate hike anticipation.
• The U.S. dollar’s performance and Treasury yields’ decline have bolstered silver prices.
• Treasury yields’ three-week low and reduced consumer confidence spotlight silver’s allure.
• Upcoming personal consumption expenditures and payrolls reports could sway silver’s trajectory.

Navigating Silver’s Recent Highs Amid Economic Uncertainty

Investor sentiment has pushed silver (XAG/USD) prices to a four-week peak, fueled by softer economic indicators and the anticipation that the U.S. Federal Reserve may hold off on future rate hikes. With Treasury yields hitting a three-week low and a decline in consumer confidence, silver is currently in the limelight for its non-interest yielding allure.

The Dollar and Treasury Yields

Silver’s price trajectory is entangled with the performance of the U.S. dollar and Treasury yields. As both metrics have seen declines, silver has secured a more bullish stance. Investors should keep an eye out for the upcoming GDP and non-farm payroll reports, as outperformance in these areas could temper silver’s recent gains.

Fed’s Wait-and-See Stance

With economic cues steering investors away from betting on U.S. financial strength, the Federal Reserve seems poised to adopt a wait-and-see approach in its upcoming policy meeting. The CME’s FedWatch Tool has shown a rise in expectations for the Fed to maintain the status quo, making the probability now stand at 53%.

Economic Indicators and Market Sentiment

Recent data reveals significant declines in job openings and consumer confidence, factors which usually boost silver’s market value. Moreover, due to the uncertainty surrounding the Fed’s upcoming monetary policy actions, there has been a shift towards a cautiously optimistic environment for silver investors.

Short-Term Outlook

The market sentiment for silver remains cautiously bullish. Investors are advised to stay vigilant, especially with the personal consumption expenditures price index and non-farm payrolls report due this week, which could be game-changers for interest rate decisions. Economic uncertainties notwithstanding, silver’s appeal appears stronger, yet the market can shift rapidly based on upcoming economic reports.

Technical Analysis

The current 4-hour price of $24.60 is well above the 200-4H and 50-4H moving averages, at $23.87 and $23.83, respectively, indicating a bullish trend. The 14-4H RSI reading of 68.45 leans towards overbought conditions but still allows room for potential upside.

On the support and resistance front, the current price is above the main support range of $23.850 to $23.600. It is approaching the main resistance area between $25.00 to $25.27, affirming bullish momentum. Using these technical indicators, we consider the current market sentiment for Silver bullish.