Silver (XAG) Daily Forecast: $29 Target Looms as Bullish Channel Strengthens

By:

Published: Aug 2, 2024, 06:34 GMT+00:00

Key Points:

Silver hits $28.93 as risk-off sentiment rises amid US economic concerns and Middle East tensions.
Dovish Federal Reserve policy and weak US data enhance silver’s appeal as a safe-haven.
Silver may test resistance at $29.15, supported by geopolitical tensions and economic uncertainty.

Silver (XAG) Daily Forecast: $29 Target Looms as Bullish Channel Strengthens

Market Overview

Silver prices (XAG/USD) have reversed their recent decline, reaching an intraday high of $28.93. This rebound is driven by risk-off sentiment and concerns about the US economy. Rising geopolitical tensions in the Middle East have also enhanced silver’s appeal as a safe-haven asset.

Additionally, the Federal Reserve’s dovish outlook has supported non-yielding assets like silver. Traders are now focusing on upcoming US labor market data, including Nonfarm Payrolls and Average Hourly Earnings for July, which could significantly influence future price movements.

Weak US Economic Data and Fed Policy Boost Silver Prices

Recent US manufacturing and employment data have raised economic concerns, increasing risk aversion and boosting silver prices. Dovish sentiment from the Federal Reserve has further supported the metal.

The Fed maintained rates at 5.25%-5.50% in July and indicated possible rate cuts due to easing inflation and a slowing labor market. This stance has weakened the US dollar, enhancing the appeal of non-yielding assets like silver.

The US ISM Manufacturing PMI fell to an eight-month low of 46.8 in July, below the expected 48.8. Initial jobless claims for the week ending July 26 rose to 249K, exceeding the forecast of 236K.

Economic concerns, a weaker US dollar, and the dovish Fed stance have also supported gold prices, as lower interest rates and increased risk aversion drive demand for safe-haven assets like silver.

Middle East Tensions Drive Silver’s Safe-Haven Appeal

Heightened geopolitical tensions in the Middle East have increased the safe-haven demand for silver. The assassination of Hamas leader Ismail Haniyeh in Tehran has escalated these tensions, with Iranian officials and Hamas blaming Israel for the attack.

As uncertainty rises, investors are turning to silver as a safe-haven asset, driving its price higher.

Short-Term Forecast

Silver prices are poised to test resistance at $29.15, driven by safe-haven demand and a dovish Fed. Geopolitical tensions and weak US economic data support the bullish trend.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $28.86, up 1.09% on the day, indicating strong bullish momentum. The 4-hour chart shows a pivot point at $28.66, with immediate resistance at $29.15, followed by $29.45 and $29.89. Support levels are located at $28.17, $27.78, and $27.30.

The 50-day EMA at $28.67 suggests a short-term uptrend, while the 200-day EMA at $29.38 indicates long-term resistance. An upward channel supports the buying trend above $28.17, with the 50-day EMA further reinforcing the bullish outlook.

Silver’s outlook remains bullish above $28.66, but a break below this pivot point could trigger a significant sell-off.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

Editors’ Picks