Silver Prices Forecast: XAG/USD Exhibits Cautious Stance as Fed Decisions Loom

Highlights

• Silver trends down despite a weaker dollar.
• Treasury yields and job data affect silver prices.
• XAG/USD hinged on Fed’s future moves.

Silver’s Weekly Performance Amid Economic Indicators

Silver (XAG/USD) is exhibiting a steady yet slightly downward trend on Friday, heading towards a weekly loss. Traders are shrugging off the weaker US Dollar, while being largely influenced by steady-to-higher Treasury yields. Longer-term traders are following the market’s interpretation of the Federal Reserve’s interest rate strategies.

Influence of the Dollar and Treasury Yields

The dollar index’s continued decline is making silver more affordable for buyers using other currencies. Concurrently, Treasury yields are experiencing a rise after hitting a two-month low, impacting silver’s price. Comex silver futures reflect this trend, showing a modest decrease.

Economic Data and Fed’s Stance

The market is digesting various economic signals, including lower-than-expected weekly jobless claims and the Federal Reserve’s latest meeting minutes. While the minutes did not indicate imminent interest rate cuts, recent data suggest easing inflationary pressures. This has led investors to speculate that the Fed might pause rate hikes, impacting silver prices.

Short-term Forecast and Market Expectations

In the short term, the market anticipates the Fed to maintain current rates in December, with a moderate chance of a rate cut by March.

The upcoming Flash Manufacturing and Services PMI reports will also influence silver’s price direction.

The current market environment, marked by a blend of economic data and Fed speculation, suggests a cautious outlook for silver, with potential for modest movement based on upcoming economic indicators and the Fed’s policy decisions. The best way to describe the XAG/USD market is Fed-dependent.

Technical Analysis

Silver (XAG/USD), currently priced at 23.63, is trading above both its 200-day and 50-day moving averages, set at 23.33 and 22.76 respectively. This positioning above these key averages suggests a generally bullish trend in the medium term.

The current price is slightly above the minor support level of 23.55, indicating that this level could act as a pivot in the short term. If the price maintains above this support, it may approach the minor resistance at 24.50. However, a break below this support could see the price testing the main support at 22.23.

Overall, the market sentiment for silver leans towards bullishness, with the potential for upward movement if it sustains above the minor support level.

Furthermore, the triggerpoint for a potential acceleration to the upside is the downtrending resistance line at 23.84.