Silver Prices Forecast: XAG/USD Surges Amid Global Tensions, Economic Fears

James Hyerczyk
Published: Apr 12, 2024, 12:15 GMT+00:00

Key Points:

  • Silver nears $30.00, driven by geopolitical and economic concerns.
  • XAG/USD underpinned as central bank increase gold reserves, highlighting market stability.
  • Bullish silver forecast based on gold at record levels, central bank activity and global tensions.
Silver Prices Forecast

In this article:

Market Overview

Silver prices are witnessing significant momentum, nearing the key psychological threshold of $30.00 amid heightened geopolitical tensions and economic uncertainties, particularly related to China. The silver market’s attraction as a safe-haven asset is intensifying due to these global concerns.

At 11:59 GMT, XAG/USD is trading $29.03, up $0.59 or +2.07%.

Geopolitical Tensions and Economic Concerns

Recent signals from Iran regarding potential retaliatory actions against Israel’s embassy in Syria underline the escalating geopolitical risks in the Middle East. These developments contribute to the increasing demand for safe-haven assets like silver. At the same time, economic data from China suggests a contraction in trade activity, further feeding global economic uncertainty and boosting the appeal of silver as a stable investment.

Central Bank Activities

In a notable development, central banks are actively participating indirectly in the silver market. Vietnam’s central bank is increasing gold bar supplies to stabilize the market. Similarly, China’s central bank augmented its gold reserves in March, indicating a strategic preference for bullion amid global instability. This central bank buying spree underlines a strong foundational support for gold and silver prices.

U.S. Economic Data and Fed Policy

In the United States, recent economic indicators such as the Producer Price Index (PPI) and Consumer Price Index (CPI) suggest a complex economic landscape. The softer PPI reading contrasts with a hotter CPI, affecting investor sentiment and Treasury yields. These developments are crucial as they influence the Federal Reserve’s approach to interest rates, with implications for commodity prices including silver.

Market Forecast

In the short term, the silver market appears bullish. The combination of central bank purchases of gold, geopolitical tensions, and the strategic shift towards safe-haven assets amidst global economic uncertainties suggest a continued upward trend in silver prices. Investors are advised to monitor central bank policies and geopolitical developments closely, as these factors are likely to drive silver’s performance in the coming weeks.

Technical Analysis

Daily Silver (XAG/USD)

The bullish trade continued on Friday with Silver (XAG/USD) hitting another multi-year high, while gold scaled a fresh record peak.

Unlike gold, silver is facing resistance, possibly the psychological $30.00 level, but beyond that price lurks the next target zone of $33.50 – $34.00.

On the downside, the market is in a strong intermediate and long-term uptrend. However, a trade through $27.53 will shift the short-term trend to down. Another potential headwind will be a closing price reversal top. While not a trend-changing event, it will indicate that traders are taking profits, while shifting strategy from buying strength to buying value.

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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