Silver Prices Forecast: XAG/USD Resilience Defies Powell’s Hawkish Tone

Highlights

• Silver sees unanticipated strength Monday, tied to subdued Treasury yields and a steady U.S. Dollar.
• Despite Powell’s hawkish tone on rates, XAG/USD is showing resilience in the face of potential hikes.
• Upcoming U.S. non-farm payroll report eyed as a pivotal indicator for the country’s economic trajectory.

Silver Prices Firm Amid Macro Factors

Silver prices firmed unexpectedly on Monday, largely due to subdued Treasury yields and a stable U.S. Dollar. This resilience appeared despite the hawkish tone set by Jerome Powell concerning interest rates.

Powell’s Remarks and Market Sentiment

At the Jackson Hole symposium, Powell, the U.S. Federal Reserve Chair, alluded to potential further rate hikes. These hikes, motivated by prevailing inflation worries, accentuate the current strength of the U.S. economy. Powell’s alertness to the ongoing inflation scenario hinted at the necessity for further tightening of monetary policies. He commented, “Inflation remains too high,” and did not shy away from suggesting the possibility of future rate elevations to ensure inflation aligns with the Federal objectives. Surprisingly, markets displayed minimal disturbance post his speech, implying that traders might have anticipated this stance.

Uncertainties and Upcoming Data

The path ahead for silver prices is cloudy. Accelerating inflation combined with the robust U.S. economy could signal another rate adjustment as soon as November. Loretta Mester of the Cleveland Federal Reserve supported this view, suggesting that controlling inflation might demand another rate hike, subsequently followed by a stable phase. Traders are eagerly awaiting the upcoming U.S. non-farm payroll report on Friday, hoping it provides deeper insights into the economy’s status.

Short-term Outlook for Silver

Despite looming economic reports and potential rate adjustments, the immediate forecast for silver seems to tilt towards the bearish side. With interest rates potentially on the ascent, assets like silver, which don’t yield, might lose their shine. However, it’s essential to consider the likelihood of a robust short-covering rally, especially since much of Powell’s Friday declarations seem to have been preemptively factored into current prices.

Technical Analysis

XAG/USD’s current 4-hour price sits at 24.20, a marginal increase from its prior value of 24.18. Comparing it with the moving averages, the current price resides comfortably above both the 200-4H moving average of 23.85 and the 50-4H moving average of 23.39. This suggests the market currently showcases an upward momentum. The 14-4H RSI is 64.97, indicating a stronger momentum but still under the overbought territory.

With the main support area placed between 22.70 to 22.28 and the main resistance area ranging from 25.00 to 25.27, the price stands closer to the midpoint of these two zones. Conclusively, the market’s sentiment for Silver is moderately bullish in the short term.