Silver (XAG) Daily Forecast: Drops to $26.74 Amid Weakening Safe-Haven Demand

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Published: Apr 30, 2024, 07:59 GMT+00:00

Key Points:

Silver dips to $26.7425 as Fed rate cut hopes wane and the USD strengthens.
Easing Middle East tensions shift investor interest from silver to equities.
Upcoming FOMC meeting and NFP report critical for future silver price direction.

Silver (XAG) Daily Forecast: Drops to $26.74 Amid Weakening Safe-Haven Demand

Market Overview

Silver (XAG/USD) did not sustain its recent upward trend and declined to an intra-day low of $26.7425. Reduced anticipation of a Federal Reserve rate cut, a stronger US dollar, and an improved outlook for global risk all contributed significantly to this decline.

The strengthening of the US dollar, largely due to expectations that the Fed might maintain higher interest rates, has particularly impacted silver. Higher interest rates generally strengthen the dollar, making dollar-denominated assets like silver more expensive for international investors. Additionally, the easing of geopolitical tensions, especially in the Middle East, has lessened the demand for silver as a safe haven.

Moreover, traders are taking a conservative stance ahead of key central bank meetings and critical economic data releases, contributing to silver’s lackluster performance.

Key upcoming events, such as the Federal Open Market Committee (FOMC) meeting and the US Nonfarm Payrolls (NFP) report, are expected to provide further insights into the direction of US monetary policy and economic health, potentially influencing silver prices shortly.

Diminished Expectations for Fed Rate Cut Boost USD, Weigh on Silver Prices

In the US, dwindling prospects for an imminent Federal Reserve rate cut have bolstered the US dollar, putting downward pressure on silver prices. Recent data, including the US Personal Consumption Expenditures (PCE) Price Index for March, which showed a rise of 0.3% and a year-on-year increase to 2.7%, has strengthened expectations that the Fed might postpone any rate reductions until September.

This anticipation of sustained higher rates has enhanced the dollar’s attractiveness, diminishing the allure of silver as both a safe-haven asset and an inflation hedge. The firming of the dollar, underpinned by solid US economic indicators and a hawkish monetary policy outlook, has consequently subdued silver’s appeal, as investors recalibrate their expectations for interest rates and seek higher-yielding alternatives.

Impact of Global Risk Sentiment on Silver Price

Globally, improved risk sentiment, driven by decreasing tensions in the Middle East and hopeful signs from ongoing peace negotiations, has lessened the demand for traditional safe-haven assets such as silver.

As a result, investors are shifting their focus toward riskier assets like equities, influencing the performance of precious metals negatively.

Silver (XAG/USD) Price Forecast

Silver – Chart

On April 30, Silver is currently trading at $26.9435, marking a decrease of 0.98%. The metal is positioned below its pivot point at $27.64, suggesting a bearish outlook for the day. Should the price fail to rise above this level, potential declines could be anticipated.

Resistance levels are established at $28.79, $29.57, and $30.33, which could limit upward movements if reached. Conversely, support is found at $26.52, with further downside protection at $25.68 and $24.72.

The 50-Day Exponential Moving Average (EMA) at $27.49 and the 200-Day EMA at $26.61 indicate potential resistance and support zones, respectively. The technical setup suggests that remaining below $27.64 might continue to drive bearish sentiment, while a move above this could alter the market dynamics to favor bulls.

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.

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