Silver Prices Forecast: Traders Eye Powell’s Testimony for Further Direction

James Hyerczyk
Published: Mar 5, 2024, 11:59 UTC

Key Points:

  • Fed's potential rate cut fuels silver price surge.
  • Powell's upcoming testimony crucial for market direction.
  • Employment data, inflation concerns to impact silver trends.
Silver Prices Forecast

In this article:

Silver Market and Federal Reserve Influence

Silver prices are soaring towards their highest prices of the year on Tuesday, propelled by the anticipation of the Federal Reserve’s potential interest rate cut in June. Key factors contributing to this trend include Federal Reserve Chair Jerome Powell’s upcoming testimony, crucial jobs data, and broader economic indicators.

At 11:43 GMT, XAG/USD is trading $23.98, up $0.09 or +0.39%.

Federal Reserve and Economic Indicators

Federal Reserve’s influence is a major driver in silver’s market performance. Silver’s current breakout rally reflects concerns over U.S. manufacturing data and price pressures. Atlanta Fed President Raphael Bostic’s comments suggest a balance between economic prosperity and inflation concerns. Bostic anticipates possible quarter-point rate cuts by year-end, although he stresses the need for caution to avoid new inflation spikes.

Interest Rate Cuts and Market Impact

The prospect of rate cuts is a double-edged sword. While it signals easing of economic pressures, it also raises concerns about inflation control. Bostic emphasizes the importance of a gradual approach to rate cuts, avoiding rapid, successive reductions. The current economic strength affords the Federal Open Market Committee (FOMC) the flexibility to deliberate rate adjustments without immediate pressure.

Data and Testimonies: A Week of Anticipation

This week is crucial for silver traders, with Powell’s testimony and key employment data releases. Traders are assigning a high probability to rate cuts by June, influenced by CME FedWatch tool insights. Upcoming data from the services sector, ADP’s private payrolls, and February job reports will shed light on labor market trends, potentially signaling rate cut directions.

Global and Domestic Factors

Internationally, policy statements from China and developments in Japan’s monetary policy are pivotal. Domestically, Powell’s congressional testimonies are anticipated to provide insights into the Fed’s rate cut strategy and prospects for a balanced economic trajectory.

Short-Term Forecast

Given the confluence of economic data, Fed policies, and global factors, a bullish outlook for silver is likely. Investors and traders should closely monitor Powell’s testimonies and upcoming labor market reports for clearer indications of the Fed’s monetary policy and its impact on silver prices.

Technical Analysis

Daily Silver (XAG/USD)

Silver (XAG/USD) is heading higher on Tuesday after breaking out above the reslient 200-day and 50-day moving averages at $23.28 and $22.95, respectively. Both moving averages are new support.

After crossing static resistance at $23.55, the market is now on course to challenge the next potential resistance at $24.50 to $24.61. The latter is a potential trigger point for another acceleration to the upside with its target coming in at $25.91.

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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