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Silver Prices Forecast: XAG/USD Dips as Dollar’s Might Overshadows

By:
James Hyerczyk
Updated: Sep 7, 2023, 08:25 GMT+00:00

Amid a robust U.S. dollar and XAG/USD's decline, silver's value faces economic crosswinds on the global stage.

Silver Prices Forecast

In this article:

Highlights

  • U.S. dollar exhibits dominance, influenced by positive services sector data.
  • Rate hikes may be halted, but 2024 whispers of potential rate adjustments.
  • China’s economic transition presents global economic forecasting challenges.

Dollar’s Resilience Dampens Silver’s Luster

Silver’s trajectory has dipped, hovering close to a one-week low for the fifth session in a row. This is in stark contrast to the U.S. dollar, which is flexing its muscles at the highest point since mid-March, propelled by upbeat U.S. services sector data pointing to steady inflationary forces.

Economic Backdrop and Federal Reserve’s Strategy

The Federal Reserve’s stance is pivotal to the equation. Even as rate hikes seem off the table for the current cycle, speculation mounts over a potential rate adjustment in 2024. The cautionary note sounded by Boston Fed President, Susan Collins, underscores this uncertainty. Her message, aligning with the Fed’s recent report, highlights temperate U.S. economic growth. However, challenges persist in the form of a decelerating labor market and easing inflation in the months of July and August.

China’s Economic Hurdles

China, traditionally a heavyweight in the silver consumption arena, is grappling with economic headwinds. Fresh statistics reveal a pronounced 8.8% plummet in exports and a 7.3% pullback in imports for the month of August. The mammoth task of transitioning from an infrastructure-heavy model to a consumption-led blueprint is anticipated to be a rocky road, casting shadows on global economic projections.

Investor Pulse:  The SPDR Gold Trust

The SPDR Gold Trust (GLD), a bellwether for silver-backed assets, recorded a 0.4% dip in its holdings, echoing the diminishing allure of silver. As U.S. interest rates edge higher, the appeal of holding silver, which inherently doesn’t yield interest, diminishes.

Forecast: Clouds on Silver’s Horizon

With the interplay of the mighty U.S. dollar, Federal Reserve’s guarded optimism, and China’s economic challenges, the near-term forecast for silver leans bearish. For savvy investors, the key lies in astutely monitoring this triad, navigating a silver market that’s brimming with uncertainties.

Technical Analysis

4-Hour Silver (XAGUSD)

Silver (XAGUSD) is currently priced at $23.08, slightly below its previous 4-hour mark of $23.11. The asset is trading below both the 200-4H moving average ($23.70) and the 50-4H moving average ($24.12), signaling a bearish bias. The 14-4H RSI stands at 24.32, deep into the oversold territory, suggesting potential exhaustion of the current downward momentum.

Price remains above the main support area between $22.70 to $22.28, but is considerably below the main resistance zone of $25.00 to $25.27. Given its position beneath key moving averages and its RSI reading, the market sentiment leans bearish for Silver in this timeframe.

 

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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