Silver (XAG) Daily Forecast: Prices Hit $31.22; Is the Upward Trendline Driving Buys?

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Updated: Jun 1, 2024, 08:34 GMT+00:00

Key Points:

Silver gains traction at $31.12, reaching an intraday high of $31.22.
Weaker US dollar, due to disappointing GDP data, boosts silver prices.
Geopolitical risks in the Middle East drive investors toward silver as a safe-haven asset.

Silver (XAG) Daily Forecast: Prices Hit $31.22; Is the Upward Trendline Driving Buys?

Market Overview

Silver prices (XAG/USD) started the last day of the week on a bullish note, gaining traction around the $31.12 level and reaching an intraday high of $31.22. The rise in prices is primarily due to a weaker US dollar, which declined following disappointing US GDP data. This data has led traders to speculate that the Federal Reserve may cut interest rates this year, further pressuring the US dollar and boosting silver prices.

Geopolitical risks and conflicts in the Middle East also contributed to the increase, as silver is traditionally considered a safe-haven asset.

Looking ahead, traders will closely monitor the US April Core Personal Consumption Expenditures Price Index (Core PCE), expected to show a monthly increase of 0.3% and a year-over-year increase of 2.8%. Higher-than-expected inflation data could support the US dollar and limit the upside potential for silver prices.

US Economic Data and Fed Policy’s Impact on Silver Prices

The US dollar has been losing momentum, edging lower as traders bet on potential Federal Reserve interest rate cuts this year following weaker US GDP data. Chicago Fed President Austan Goolsbee expressed concern about housing inflation but noted a strong labor market.

Atlanta Fed President Raphael Bostic sees a rate cut in July as unlikely due to slowing inflation, while New York Fed President John Williams is confident inflation will decelerate later this year.

The second estimate of US GDP showed 1.3% annualized growth in Q1, down from the previous 1.6%, but aligning with market expectations. US weekly initial Jobless Claims for the week ending May 25 increased slightly to 219K from 216K, marginally above the consensus of 218K.

The weakening US dollar, combined with concerns over rate cuts and mixed economic data, supports silver prices amid uncertain market sentiment.

Impact of Middle East Geopolitical Tensions on Silver Prices

On the geopolitical front, the long-lasting conflicts in the Middle East, particularly involving Israel and Gaza, were seen as another key factor that kept the silver price higher as investors sought safe-haven assets. Israel’s recent assertion of control over Gaza’s land border with Egypt will likely weaken its relationship with Egypt, adding to regional tensions.

These geopolitical risks increase uncertainty in financial markets, driving investors toward assets like silver, which is traditionally considered a safe haven. As a result, heightened geopolitical tensions in the Middle East are likely to support silver prices in the near term.

Short-Term Forecast

Silver (XAG/USD) may face resistance at $31.65, with support around $30.60. Traders should monitor the US Core PCE data closely.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is currently priced at $31.0445, down 0.34%. The pivot point, marked by the green line, is at $31.15. Immediate resistance levels are at $31.65, $32.33, and $32.96. On the downside, immediate support is at $30.60, with further supports at $30.06 and $29.37.

The 50-day Exponential Moving Average (EMA) is $31.12, indicating potential resistance, while the 200-day EMA is $29.15. The technical outlook for silver is bullish above the pivot point of $31.15. A break below $30.60 could drive a sharp selling trend.

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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