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Silver (XAG) Daily Forecast: Hits $30.60 on Weak DXY and Safe-Haven Demand, Up 1.37%
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Key Points:
- Silver prices rise to $30.6185, driven by a weaker US dollar and Fed rate cut expectations.
- Geopolitical tensions in the Middle East increase safe-haven demand for silver, pushing prices higher.
- Traders cautious ahead of US Initial Jobless Claims data and Nonfarm Payrolls report on Friday.
Market Overview
Silver price (XAG/USD) extended its winning streak, trading around the $30.39 level and reaching an intra-day high of $30.61. This upward trend is driven by a weaker US dollar amid rising Fed rate cut expectations.
Ongoing geopolitical tensions in the Middle East also contribute to the higher safe-haven demand for silver.
Traders remain cautious ahead of the US Initial Jobless Claims data release. Meanwhile, attention is focused on the US Nonfarm Payrolls (NFP) report due on Friday.
Anticipated Fed Rate Cut and Soft Economic Data Drive Silver Prices
The US dollar edged lower due to sluggish US macroeconomic data, reinforcing expectations that the Federal Reserve will cut interest rates later this year. Markets anticipate an imminent rate cut by the Fed in response to a slowing economy. This has kept US Treasury bond yields at their lowest levels in over two months, putting pressure on the dollar.
The ADP reported that US private sector employment increased by 152,000 in May, below the expected 173,000 and down from the previous month’s revised 188,000. Meanwhile, the ISM Services PMI rose to 53.8 in May, its highest level since August, surpassing expectations of 50.8, though the Prices Paid sub-component dipped to 58.1 from 59.2.
Additionally, softer US Personal Consumption Expenditures (PCE) Price Index data on Friday indicated easing inflationary pressures. These factors combined to push US Treasury bond yields lower, which supported silver prices.
The anticipation of a Federal Reserve rate cut and softer economic data pushed US Treasury bond yields lower, supporting silver prices amid easing inflationary pressures and economic uncertainties.
Impact of Gaza Conflict on Silver Prices
The geopolitical situation in Gaza has worsened, with Israeli airstrikes and shelling causing civilian casualties. Hamas, which controls Gaza, is demanding a permanent ceasefire and complete Israeli withdrawal.
Hunger-related deaths are rising in Gaza due to food distribution issues. Since October 7, the conflict has resulted in over 36,000 Palestinian deaths and nearly 83,000 injuries.
These escalating tensions drive investors to seek safe-haven assets like silver, pushing its price higher amid the prevailing uncertainty and instability.
Short-Term Forecast
Silver’s short-term forecast remains bullish above $30.48 pivot point. Immediate resistance at $30.89 could lead to $31.57 if broken.
Silver is currently trading at $30.39, reflecting a 1.37% increase on a four-hour chart timeframe. The pivot point is set at $30.48, serving as a key indicator for potential price movements. Immediate resistance levels are $30.89, $31.57, and $32.29. On the downside, immediate support is found at $29.88, followed by $29.38 and $28.79.
The 50-day Exponential Moving Average (EMA) stands at $30.52, while the 200-day EMA is at $29.37, indicating a longer-term bullish trend. However, the price remains below the 50-day EMA, suggesting short-term caution.
In conclusion, silver’s outlook is bearish below $29.85. A break above this level could trigger a bullish trend, whereas maintaining below it may lead to further declines.
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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