Silver (XAG) Daily Forecast: Bullish Run to $28.09, More Upside Ahead?

US Federal Reserve Interest Rate Cut: Anticipated Impact on Silver Prices

On the US front, the anticipation of a cut in interest rates by the US Federal Reserve was seen as one of the key factor that kept the silver price higher.

• Fed’s Cautious Stance: Federal Reserve officials, led by Chair Jerome Powell, indicate a potential interest rate cut later in the year, awaiting clearer inflation trends.
• Rate Cut Timeline: Atlanta Fed President Raphael Bostic suggests a single rate cut in Q4 2024, diverging from the more aggressive cuts predicted by others.
• Silver’s Prospects: Silver prices may respond positively to any rate reduction, as lower interest rates enhance the allure of non-yielding assets like precious metals.

Federal Reserve Chair Jerome Powell, speaking at Stanford on April 3, 2024, expressed the need for more data before considering interest rate cuts, expected by markets in June.

Despite job gains and inflation exceeding forecasts, Powell emphasized that rates would only drop if inflation consistently approached the Fed’s 2% target. This cautious approach, coupled with Fed officials like Raphael Bostic advocating for minimal rate cuts late in 2024, suggests a slower transition to lower rates.

For Silver (XAG/USD), currently hovering around $28.09, this scenario presents a mixed outlook. While the delay in rate cuts may temper immediate gains, the eventual easing of monetary policy could bolster Silver’s appeal as a hedge against currency devaluation and inflationary pressures, potentially driving prices higher in the medium term.

Geopolitical Tensions in the Middle East on Silver Prices

Geopolitical tensions in the Middle East region have played a significant role in pushing silver price higher, as uncertainty and instability in this region drive investors towards safe-haven assets like silver.

It should be noted that the long lasting worsening geopolitical situation in the Middle East has heightened global uncertainty, leading investors to seek safe-haven assets like silver and gold.

On the other side, the instability in the region has raised concerns about supply disruptions and increased risk premiums, driving up the demand for silver and consequently its prices.