Silver Prices Forecast: Technical Pattern Indicates Presence of Sellers

Silver Prices Decline

Silver is edging lower on Thursday after hitting its highest level since December 4 earlier in the session. The price action suggests traders aren’t impressed with the Fed’s stance on Wednesday, nor are they tracking silver very closely. Technically, a lower close today will create a bearish formation, which could lead to the start of a near-term correction.

At 11:00 GMT, XAG/USD is trading $25.47, down $0.11 or -0.44%.

Federal Reserve’s Influence on Silver

The Federal Reserve’s stance of maintaining its projection for three rate cuts this year has mixed implications for silver. Typically, lower interest rates boost the attractiveness of non-yielding assets like silver. However, Powell’s recent remarks reflecting caution over the U.S. economy and a slower pace of inflation reduction have tempered the market’s initial positive reaction. This cautious sentiment from the Fed is directly influencing silver’s current price movement.

Technical Market Indicators

Examining the technical indicators, silver is showing signs of a bearish trend. Key support levels are being tested, indicating potential further declines if these levels are breached. Resistance levels are holding, suggesting a lack of aggressive buying at higher prices. Traders are advised to watch these technical levels for potential short-selling opportunities or defensive plays.

Gold and Silver Market Comparison

Gold’s market shows a different picture, with prices being driven up by steady central bank buying and strong demand in markets like China and India. This stark contrast in market behavior between gold and silver is mainly due to the lack of similar support for silver from central banks and investors. The resultant volatility in silver prices is more pronounced compared to the relative stability in gold prices.

Outlook for Silver Traders

Silver traders need to be aware of the larger economic and monetary policy landscape as it significantly influences silver prices. Upcoming economic data releases and shifts in monetary policy should be monitored for their potential impact on market prices.

Bearish Short-Term Forecast for Silver

The immediate outlook for silver is bearish, considering the Fed’s current monetary policy and the contrasting trends in the gold market. The broader economic environment suggests a continuation of downward pressure on silver prices. Traders might look for opportunities to fade the rallies if significant sellers are identified, while remaining vigilant to any unexpected changes in economic conditions or monetary policy that could reverse the current market trend.

Technical Analysis

XAG/USD is trading lower on Thursday after an earlier rally failed to attract enough buyers to sustain the rally. The price action suggests sellers are defending a pair of tops at $25.91 and $26.14.

A lower close today will form a potentially bearish closing price reversal top. While it doesn’t change the trend to down, it does indicate there are more sellers then buyers at current price levels.

The first downside target is $25.25, followed by $24.73.