Silver (XAG) Daily Forecast: Geopolitical Calm Pressures, Targets $27.50 Support

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Published: Apr 25, 2024, 07:18 GMT+00:00

Key Points:

Silver (XAG/USD) trades below $30.00, hitting an intraday low of $26.98.
U.S. Q1 GDP expected at 2.5%, with Durable Goods Orders rising by 2.6% in March.
Iran reduces military presence in Syria, easing tensions and stabilizing markets.

Silver (XAG) Daily Forecast: Geopolitical Calm Pressures, Targets $27.50 Support

Market Overview

Silver (XAG/USD) currently trades below $30.00, with an intraday low of $26.98. This decline reflects a shift in market sentiment towards riskier assets, sparked by diminishing geopolitical tensions in the Middle East, which has lessened the demand for silver as a safe haven.

Additionally, expectations that the U.S. Federal Reserve will sustain elevated interest rates have strengthened the U.S. dollar, placing downward pressure on silver prices. This sentiment is compounded by a reduced likelihood of near-term rate cuts by the Fed.

Investors remain cautious, awaiting further indicators on the Fed’s monetary policy direction. Key upcoming U.S. economic data, including today’s Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index on Friday, are likely to influence silver’s price movements as traders look for more definitive signals to guide their investment decisions.

Impact of US Economic Factors on Silver Price

In the U.S., the Federal Reserve’s commitment to prolonged higher interest rates persists amid ongoing inflation concerns. This stance follows robust consumer inflation data and hawkish remarks from Fed officials, solidifying market expectations of no rate cuts until at least September.

Consequently, non-yielding metals like silver face a ceiling on their prices, as elevated interest rates diminish their appeal compared to interest-bearing assets.

On the economic front, the initial estimate of U.S. GDP for Q1 is anticipated to reveal a growth rate of 2.5%, a slowdown from the previous quarter’s 3.4%. Concurrently, Durable Goods Orders surged by 2.6% in March, signaling some positive momentum in the manufacturing sector.

However, excluding transportation, new orders only rose by 0.2%, highlighting a more tempered growth trajectory.

Impact of Easing Geopolitical Tensions and Iran’s Military Reduction on Silver Price

The diminishing concerns over escalating tensions in the Middle East have influenced a shift in global risk sentiment, impacting the demand for safe-haven assets such as silver. As geopolitical uncertainties ease, investors are less inclined to seek refuge in silver and similar assets, opting instead for riskier investments with potentially higher returns, like stocks or real estate.

Following Israeli strikes, Iran has scaled back its military presence in southern Syria, although it maintains a presence elsewhere in the country. This move, accompanied by the replacement of some personnel with fighters from Lebanon and Iraq, has reduced Iran’s visibility in Damascus.

While observers note Iran’s advisers leaving Syria, this reduction signals a positive shift in market sentiment, indicating a potential de-escalation of tensions with Israel and contributing to market stability.

The presence of Iran-backed fighters from Lebanon and Iraq may further bolster regional stability, reassuring investors and fostering a positive market outlook. Consequently, the decreased demand for safe-haven assets like silver, driven by easing geopolitical tensions and Iran’s reduced military presence in Syria, has exerted downward pressure on its price.

Silver (XAG/USD) Price Forecast

Silver – Chart

Today, Silver is trading at $27.11, marking a decrease of 0.31%. The metal currently sits below its pivot point at $27.50, indicating a bearish bias in the near term. Resistance levels are established at $28.79, $29.57, and $30.51, which Silver needs to surpass to signal a potential bullish reversal. Conversely, support can be found at $26.52, followed by stronger levels at $25.68 and $24.72, which are critical for preventing further declines.

The 50-day Exponential Moving Average (EMA) at $27.68 suggests resistance just above the current price, while the 200-day EMA at $26.47 provides some support below. Notably, the 50 EMA has shifted to suggest a potential downtrend, with the former upward trendline now acting as resistance. Given the current setup, Silver remains bearish below $27.50.

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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