Silver (XAG) Daily Forecast: Slips Below 50 EMA, More Sell-Off Ahead?

Arslan Ali
Updated: Jun 18, 2024, 07:16 GMT+00:00

Key Points:

  • Easing inflationary pressures support the anticipation of a Fed rate cut in September.
  • Fed's hawkish stance limits Silver (XAG/USD) gains, supporting elevated US Treasury yields.
  • US Dollar dip-buying creates headwinds, but 2024 rate cut expectations help stabilize Silver.

In this article:

Recent US macroeconomic data indicates that inflationary pressures are easing, maintaining the anticipation for a Federal Reserve rate cut in September. This expectation provides a supportive backdrop for Silver (XAG/USD) prices.

Fed’s Hawkish Stance and US Dollar Impact

Last week, the Federal Reserve adopted a hawkish stance, signalling only one interest rate cut for this year. This outlook supports elevated US Treasury bond yields, which strengthens the US Dollar (USD) and limits significant gains for Silver (XAG/USD).

Additionally, a generally positive risk tone might cap the safe-haven demand for Silver, necessitating robust follow-through buying to confirm the end of the recent decline.

US Dollar Dip-Buying and Inflation Data

On Tuesday, the US Dollar experienced some dip-buying, creating headwinds for Silver prices. Despite this, expectations for two rate cuts by the Fed in 2024 help temper any significant slide in Silver.

The Fed’s projection of a single rate cut this year, compared to three cuts projected in March, has allowed US bond yields to recover and the USD to regain traction.

Philadelphia Fed President Patrick Harker’s comments on maintaining current rates to control inflation added further pressure on Silver.

Economic Indicators and Fed Speeches

Investors are now focused on upcoming US economic data releases. Core Retail Sales and Retail Sales, both scheduled for release on Tuesday, are expected to show growth of 0.2% and 0.3% respectively. Industrial Production data is also set to be released, with a forecasted increase of 0.3%.

These indicators are anticipated to provide short-term trading opportunities for Silver (XAG/USD). Additionally, speeches by several influential FOMC members will likely impact USD demand and, consequently, Silver prices.

In summary, while easing inflationary pressures supports hopes for future rate cuts, the Fed’s current hawkish stance and a strong US Dollar pose challenges for significant gains in Silver prices.

Key economic data and Fed communications will play a crucial role in shaping the near-term outlook for Silver (XAG/USD).

Short-Term Forecast

Silver (XAG/USD) at $29.34 remains supported by easing inflationary pressures and the potential for a Fed rate cut in September. However, the Fed’s hawkish stance and strong USD limit gains above $29.40.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver - Chart
Silver – Chart

Silver (XAG/USD) is currently trading at $29.34, forming a symmetrical triangle pattern on the 2-hour chart, indicating potential breakout volatility. The pivot point at $29.40 is crucial for determining the next move.

Immediate resistance levels are $29.40, $29.69, and $30.18. On the downside, immediate support is found at $29.20, with subsequent support levels at $28.66 and $28.37.

The 50-day Exponential Moving Average (EMA) is at $29.39, and the 200-day EMA is at $29.79. A bearish crossover below the EMAs is likely to drive a selling trend.

Given the symmetrical triangle pattern and EMA positions, a breakout above $29.40 could indicate a bullish move, while a drop below this level suggests further downside potential. Therefore, a strategic approach would be to sell below $29.40 and vice versa.

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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