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Silver (XAG) Daily Forecast: Price Nears $29.50; Eyes on US CPI and Fed Rate

By:
Arslan Ali
Published: Jun 12, 2024, 07:22 GMT+00:00

Key Points:

  • Silver price rises to $29.49 amid weak US dollar and geopolitical tensions.
  • Demand for silver as a safe-haven asset increases due to Gaza conflict.
  • Traders await US inflation data and FOMC meeting for future rate cues.
Silver - Chart

In this article:

Market Overview

Despite reduced bets for a September Fed rate cut and a strong US labor market, the Silver price (XAG/USD) regained strength, turning bullish around $29.44 and reaching an intraday high of $29.49.

The upward trend is attributed to a slight weakness in the US dollar, which lost some gains recently due to cautious sentiment ahead of the latest US consumer inflation figures and the Federal Open Market Committee (FOMC) meeting on Wednesday.

Additionally, escalating conflict and instability in the Gaza region have increased demand for safe-haven assets, further supporting silver prices. This geopolitical tension is seen as a key factor in helping the Silver price remain strong.

US Dollar Strength and Silver Prices: Impact Amid Economic Confidence

The US dollar has been gaining momentum, driven by growing investor confidence in the economy. Expectations for a Federal Reserve interest rate cut in September have dwindled due to strong labor market conditions and persistent inflation, pushing the US dollar to nearly a one-month high.

Investors are now focused on the upcoming US consumer inflation figures and the FOMC monetary policy decision. The Fed may consider a modest 25 basis point rate cut later in the year, possibly in November or December.

The anticipated easing in the headline US Consumer Price Index for May, coupled with persistent inflationary pressure from the Core CPI, could influence the Fed’s decision and impact silver prices. Traders are closely monitoring signals from the FOMC meeting to gauge future market movements.

Geopolitical Unrest and Silver Prices: Impact Amid Middle East Conflict

Geopolitical tensions have escalated as Hamas and Palestinian Islamic Jihad responded to a UN-backed ceasefire proposal through mediators in Qatar and Egypt amid ongoing conflict. UNICEF reports significant damage in Gaza, affecting homes, hospitals, and schools. Hezbollah has confirmed the death of a senior commander in an Israeli attack on Lebanon.

Additionally, six people were killed in an Israeli military raid in the West Bank, with casualties in Gaza reaching 37,164 dead and 84,832 wounded.

This geopolitical unrest in the Middle East elevates uncertainty, prompting investors to seek safe-haven assets like silver. Increased demand for silver, viewed as a stable asset during conflicts, could push prices higher.

Short-Term Forecast

Silver (XAG/USD) is poised to remain bullish, driven by geopolitical tensions and a slightly weaker US dollar. Key support at $29.13 and resistance at $29.81 will determine its immediate trajectory.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver - Chart
Silver – Chart

Silver is currently trading at $29.43, marking a rise of 0.30%. The metal is positioned slightly above its pivot point at $29.13, which is crucial for today’s trading dynamics.

Resistance levels are mapped out at $29.81, $30.14, and $30.62, which could limit upward movements if tested.

Conversely, support is established at $28.75, followed by lower thresholds at $28.37 and $27.99, which may halt any downward trends.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $30.02 and the 200-day EMA at $29.47, suggesting a cautious market sentiment.

The current price hovering just below the $29.50 mark indicates a tentative stance. A move above $29.50 could confirm a bullish trend, whereas failure to surpass this level might reinforce bearish sentiments.

About the Author

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.

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