Silver (XAG) Daily Forecast: Soars to $28.60 Amid Weaker DXY – Buy Now?

Arslan Ali
Updated: Apr 18, 2024, 08:29 GMT+00:00

Key Points:

  • Silver prices peak at $28.60 amid Middle East tensions and US Dollar's 0.50% decline.
  • Potential Israeli responses to Iran could further boost silver's safe-haven appeal.
  • Fed's hawkish stance on inflation may indirectly support silver if the dollar remains weak.
Silver (XAG) Daily Forecast: Soars to $28.60 Amid Weaker DXY – Buy Now?

In this article:

Market Overview

Silver prices (XAG/USD) recently surged to an intra-day high of approximately $28.60, driven by heightened geopolitical tensions and a declining US Dollar. The ongoing instability in the Middle East, particularly the increasing hostilities between Israel and Iran, has escalated the demand for safe-haven assets such as silver.

Concurrently, a bearish correction in the US Dollar, highlighted by the US Dollar Index (DXY) losing ground to drop to $105.85 (losing approx. 0.50%) amid lower US Treasury yields, has made silver more attractive to investors holding other currencies.

Geopolitical Concerns Amplify Silver’s Appeal

Investors are particularly focused on Israel’s potential responses to Iranian provocations. The uncertainty of conflict escalation in this region has played a pivotal role in the recent silver price rally. Any further signs of conflict could intensify this trend, as silver traditionally benefits during times of increased market volatility and geopolitical risk.

Impact of US Dollar on Silver Prices

The weakening US Dollar continues to be a significant factor behind silver’s bullish performance. As the dollar, that lost nearly 0.50% to trade at $105.85, becomes less expensive in other currencies, commodities priced in dollars, like silver, become more accessible to international investors, thus boosting demand.

Federal Reserve Policies: A Dual-Edged Sword

Looking forward, the Federal Reserve’s monetary policies will be crucial in shaping the trajectory of both the US Dollar and silver prices. Although the Fed has maintained a hawkish stance to combat inflation, suggesting potential tightening of monetary policy, any indication of prolonged high inflation or delayed rate hikes could temper the strength of the US Dollar.

Fed Chair Jerome Powell’s recent remarks suggest a slow progression towards the inflation target, implying that high-interest rates may persist longer than anticipated, which could sway investor preference towards safe-haven assets like silver, despite a generally strengthening dollar.

Silver (XAG/USD) Price Forecast

Silver Price Chart
Silver Price Chart

Silver prices are showing strength today, currently up by 0.86% at $28.48. The metal is trading above its pivot point of $28.16, indicating a positive outlook. Resistance levels are identified at $29.57, followed by $30.51 and $31.48. On the downside, support is firmer at $27.32, with additional layers at $26.28 and $25.37.

Technical indicators bolster the bullish scenario. The 50-Day Exponential Moving Average (EMA) at $28.02 and the 200-Day EMA at $26.08 both suggest underlying strength. The current upward channel, which has been supportive around the $28.50 level, favors buyers, but a drop below the pivot point of $28.16 could reverse the trend sharply lower, potentially targeting $27.35.

Conclusion: The market sentiment for Silver remains bullish as long as it stays above $28.16. However, traders should be cautious as breaking this level could trigger a significant decline.

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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