Silver Prices Forecast: XAG/USD Traders Eye US Economic Data, Fed Moves

Highlights

• Silver navigates a tumultuous financial landscape marked by a strong dollar and rising Treasury yields.
• The precious metal remains close to its recent two-week low amidst heightened market uncertainty.
• XAG/USD investors’ eyes are on U.S. economic markers, anticipating insights into the Federal Reserve’s rate strategy.

Silver’s Position in a Volatile Market

Amidst a financial landscape characterized by a robust dollar and escalating Treasury yields, silver (XAG/USD) treads cautiously, staying close to a recent two-week low. This prevailing uncertainty among investors is heightened as they anticipate key U.S. economic indicators, looking to discern the Federal Reserve’s next move concerning interest rates.

As the sheen of silver fades for the third day in a row, market murmurs point to the expectation that the Federal Reserve might uphold high interest rates. This sentiment, bolstered by upcoming U.S. inflation data, has pushed many to the dollar’s relative safety, making silver a more expensive proposition for global investors.

With the Federal Reserve’s preferred inflation gauge, the U.S. PCE index, set to release soon, the market is abuzz with speculation. A dip in inflation could be the breather silver needs, while an uptick might tighten the noose further.

Echoing this sentiment, Minneapolis Fed’s Neel Kashkari forecasts a potential “soft landing” for the U.S. economy. Yet, the looming shadow of significant rate hikes to combat inflation remains. Amidst these challenges, the demand for physical silver remains consistent, drawing strength especially from central banks and the Chinese market.

Short-Term Outlook

With U.S. GDP growth and unemployment data on the horizon, coupled with the specter of a potential U.S. government shutdown, the market sentiment leans bearish for silver in the short term.

Technical Analysis

Silver’s (XAG/USD) current position against the U.S. Dollar showcases a subtle bearish sentiment in the market. Hovering slightly below both the 200-Day and 50-Day moving averages at 23.46 and 23.49 respectively, the Daily Price of 22.45 underscores a cautious downtrend.

The 14-Day RSI stands at 36.36, indicating that momentum has weakened, though it hasn’t entered the oversold territory yet.

As the current price edges perilously close to the main support level of 22.46, any further downward movement might test this threshold. While trend line support is set at 22.34, bearish traders eye this level for possible weakness and the start of an acceleration to the downside.

Clearly, trader reaction to the trend line at 22.34 sets the “technical tone” on Thursday.