Silver Prices Forecast: Stable Amid Economic Uncertainties Ahead of PPI Data

Silver Prices

Silver prices remained steady on Thursday, despite geopolitical and economic uncertainties. The market was influenced by hot U.S. inflation data, which tempered expectations of the Federal Reserve initiating a rate-cutting cycle in June.

At 12:05 GMT, XAG/USD is trading $28.00, up $0.07 or +0.25%.

Inflation Surprises

U.S. consumer prices surged more than anticipated in March, raising concerns among Fed officials about the progress on inflation. This has prompted discussions about the necessity of maintaining a longer period of tight monetary policy.

Impact on Silver

Higher interest rates diminish the attractiveness of holding non-yielding assets like silver. However, real interest rates have been a detrimental factor for silver lately, as investors continue to allocate more to silver in response to fears driven by economic uncertainties.

Fed Policy Outlook

The latest inflation data has fueled doubts about the possibility of interest rate cuts in June, contrary to earlier market expectations. Traders have adjusted their forecasts, with September emerging as a potential starting point for rate cuts, according to CME FedWatch tool.

Producer Price Index (PPI)

Another important data release, the PPI, is expected to shed further light on inflationary pressures. Economists anticipate a rise in the PPI for March, which could impact market expectations regarding Fed policy.

Short-term Market Forecast: Cautiously Bullish

In the near term, silver prices may trend bearish amid concerns over inflation and interest rates, dampening investor sentiment. Despite potential temporary support from geopolitical tensions, the overall trend hinges on economic indicators and Fed policy.

While holding steady amidst uncertainty, the market remains cautiously bullish, with close attention to inflation data and Fed signals. Short-term outlook suggests continued bullish sentiment, but vulnerable to economic and Fed news.

Technical Analysis

The short-term trend is up along with the intermediate and long-term. Today’s inside trade after yesterday’s outside move indicates investor indecision and impening volatility.

While a trade through $28.52 signals a resumption of the uptrend, a move through $27.53 will be a sign of weakness, making the market vulnerable to a near-term correction into $26.90.