Silver Prices Forecast: XAG/USD Leans Bullish Amid Economic Uncertainty

Silver Market Outlook Amid Economic Data

The silver market, exhibiting resilience, maintains a bullish trend despite challenges like rising yields and a strong US Dollar. This positive sentiment is underpinned by key economic data and central bank activities.

At 12:19 GMT, Silver (XAG/USD) is trading $27.64, up $0.14 or +0.52%.

Global Central Bank Influence

A significant driver for silver’s bullish trend is the ongoing purchase of gold by central banks in Asia, particularly the People’s Bank of China and the Reserve Bank of India. China’s gold reserves, now at 72.74 million fine troy ounces, exemplify this trend. These purchases are instrumental in bolstering silver prices, as silver often follows gold’s market trajectory.

US Economic Data and Treasury Yields

Despite a robust US jobs report suggesting potential bearish pressures, the silver market has sustained its upward momentum. The market is closely watching the upcoming CPI and producer price index, as well as Federal Reserve officials’ statements, for cues on the economic outlook and monetary policy.

CPI Report and Fed Policy

The Consumer Price Index report is particularly pivotal. Bank of America predicts a moderation in the CPI for March, which could signal easing inflation pressures. A subdued inflation report might influence the Federal Reserve to adopt a more dovish stance, potentially leading to a rate cut in June. This scenario could bolster silver prices, as lower interest rates typically decrease the opportunity cost of holding non-yielding assets like silver.

Short-term Market Forecast

Considering these factors, the short-term forecast for silver remains bullish. The market is poised to react to the CPI report, which will provide crucial insights into the Federal Reserve’s policy direction. A dovish tilt in response to moderated inflation could further fuel the upward momentum in silver prices. Investors should stay alert to the implications of this key economic data and central bank policy decisions in shaping the market’s path.

Technical Analysis

XAG/USD reaffirmed its uptrend on Monday in a volatile trade. A move through $28.09 will signal a resumption of the uptrend, while a trade through $26.28 will change the minor trend to down.

Nonetheless, given the position of the 50-day moving average at $23.94 and the 200-day moving average at $23.48, any short-term weakness is likely to be attractive to new buyers.