Silver (XAG) Daily Forecast: Prices Rise to $29.70; More Upside or Reversal Ahead?

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Published: Jun 5, 2024, 06:58 GMT+00:00

Key Points:

Silver prices reached $29.80 due to a weaker US dollar and Middle East conflicts.
Anticipated Fed rate cuts and low Treasury yields continue to support silver prices.
The Job Openings report revealed a significant drop, further boosting silver’s safe-haven appeal.

Market Overview

Silver prices (XAG/USD) are gaining traction, turning bullish around the $29.54 level and reaching an intraday high of $29.80. This upward trend is driven by a mild weakness in the US dollar and ongoing conflicts in the Middle East.

The US dollar had gained traction the previous day, pushing silver prices down, but its gains are now fading, providing support for silver.

Traders are hesitant to take strong positions ahead of the crucial US Nonfarm Payrolls (NFP) report on Friday. Meanwhile, the US ADP report on private-sector employment and the US ISM Services PMI will also be closely watched.

Federal Reserve Expectations and Economic Data Boost Silver Prices

The broad-based US dollar has lost some of its gains due to expectations that the Federal Reserve will cut interest rates later this year, driven by softer US economic data. This belief has kept US Treasury bond yields low, benefiting silver prices.

Concerns about the US economy softening more than expected have solidified expectations for a Federal Reserve rate cut in September, pushing Treasury bond yields lower and further supporting silver prices.

The Job Openings and Labor Turnover Survey (JOLTS) report revealed a larger-than-expected drop in job openings, down by 296,000 to 8.059 million in April, marking the lowest level in over three years.

This adds to concerns raised by the disappointing US ISM Manufacturing Purchasing Managers’ Index (PMI) released earlier this week, indicating unexpected weakness in business activity and suggesting a slowdown in the US economy.

Geopolitical Tensions in Gaza and Their Impact on Silver Prices

The situation in Gaza has escalated with Israeli air attacks and shelling causing casualties, including civilians and police officers. Israeli ground forces have entered the Bureij refugee camp, while airstrikes and artillery continue. Hamas demands a permanent truce and full withdrawal from Gaza for any ceasefire.

Hunger-related deaths are increasing in Gaza, with warnings of worsening conditions without changes to food distribution. Since October 7, the conflict has resulted in over 36,000 Palestinians killed and nearly 83,000 wounded.

The escalation in Gaza, combined with humanitarian concerns and geopolitical tensions, leads investors to seek safe-haven assets like silver. Increased geopolitical instability often boosts demand for silver as a hedge against uncertainty, pushing prices higher.

Short-Term Forecast

Silver prices are expected to remain bullish above $29.37, supported by low US Treasury yields and potential Federal Reserve rate cuts. Immediate resistance is at $30.05, with a break below $29.37 possibly triggering selling.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver prices (XAG/USD) have risen to $29.74, marking a 0.79% increase on the four-hour chart. The pivot point is positioned at $29.37, with immediate resistance at $30.05, followed by further resistances at $30.86 and $31.57. On the downside, immediate support is at $28.70, with additional support levels at $27.98 and $27.49.

Technical indicators show that the 50-Day Exponential Moving Average (EMA) is at $30.64, while the 200-Day EMA stands at $29.33. Silver is currently trading near the lower boundary of a downward channel around the $29.36 level.

Closing above this level could signal a buying trend, potentially pushing prices higher. In conclusion, the outlook for silver remains bullish above the $29.37 pivot point.

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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