Silver (XAG) Daily Forecast: Jumps to $28.99 on U.S. PPI Slowdown; Buy Now?

By:

Arslan Ali

Published: Apr 12, 2024, 07:33 GMT+00:00

Key Points:

Silver surges to $28.99, up 1.23%, after softer U.S. PPI contrasts previous day's high CPI.
U.S. CPI rise at 0.4% impacts precious metals, PPI relief at 0.2% supports silver's gain.
Persistent global economic worries drive central banks to increase gold reserves, boosting safe-haven demand.

In this article:

Silver

-1.79%

Market Overview

Silver shows a robust increase, with the metal trading at $28.99, marking a 1.23% rise as a softer U.S. Producer Price Index (PPI) suggested a slowdown in factory inflation. That was contrasting sharply with the previous day’s higher-than-expected Consumer Price Index (CPI) results.

U.S. Inflation Data Influences Precious Metals

The divergent U.S. inflation reports significantly impacted precious metals. The Consumer Price Index (CPI) data released on Wednesday showed U.S. inflation rising unexpectedly, with a month-over-month increase of 0.4%, which is above the anticipated 0.3%. However, the subsequent Producer Price Index (PPI) figures offered some relief, showing a more modest increase of 0.2% against predictions of 0.3%.

Global Economic Concerns Drive Safe-Haven Demand

Ongoing global economic concerns, highlighted by persistent economic weakness in China, have significantly bolstered safe-haven demand. Central banks, particularly in Asia, have responded by continuously augmenting their gold reserves, marking a 17-month streak of increases.

This strategic accumulation underscores a broader trend towards more secure assets as a hedge against global economic instability. For instance, the People’s Bank of China added approximately 32 tons to its gold reserves in the last reported month, reflecting increased risk aversion amid these uncertainties.

This trend is a clear indicator of the heightened demand for gold and silver as a reliable investment during turbulent times.

Impact of U.S. Rate Outlook on Precious Metals

Despite recent price rebounds, the outlook for precious metals remains tempered due to the prospect of enduring high U.S. interest rates. The minutes from the Federal Reserve’s March meeting hint at a policy of maintaining higher rates longer than previously anticipated, to combat persistent inflation.

Such high rates raise the opportunity cost of holding non-yielding assets like gold and silver, potentially curtailing their price increases. Nevertheless, the market continues to find support from safe-haven buying, driven by fears of global economic deterioration.

Silver (XAG/USD) Price Forecast

Silver – Chart

Today’s technical analysis of Silver shows a robust increase, with the metal trading at $28.99, marking a 1.23% rise. The pivotal point for today is set at $28.42. Breaking past this level, Silver faces immediate resistance at $29.57, with further obstacles at $30.36 and $31.01.

On the downside, should the price dip, support can be found at $27.54, with additional safety nets at $26.80 and $25.76. Recently, Silver broke through a symmetrical triangle pattern that had capped its price at $25.75, igniting a bullish trend that now targets the $29.57 resistance level.

The 50-Day and 200-Day Exponential Moving Averages at $25.07 and $23.76 respectively, underline a strong upward momentum. In conclusion, Silver’s market stance is bullish as long as it remains above $28.42.

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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