Market Overview
Silver (XAG/USD) continued its rise, holding steady around $31.36and reaching an intraday high of $31.88. The bullish trend is supported by a weaker USD and ongoing geopolitical tensions in the Middle East.
Looking ahead, traders are focusing on upcoming US economic data, including Consumer Confidence, speeches from Fed officials Kashkari, Daly, and Cook, and the Core PCE Price Index. If Fed officials maintain a hawkish stance and inflation remains high, expectations for a rate cut may be postponed, potentially strengthening the US dollar and putting downward pressure on silver.
Additionally, hawkish comments from Fed officials and strong US Producer Price Index (PPI) data may limit the decline in the US dollar, capping further gains in silver prices.
US Economic Outlook and its Impact on Silver Prices
On the US front, the broad-based US dollar has been weakening, but there’s optimism for its recovery amid hawkish Fed minutes and strong economic data. Traders are awaiting crucial US inflation data, with recent Fed minutes indicating a gradual approach to hitting the 2% inflation target.
Meanwhile, the possibility of a US Federal Reserve rate cut in September has dropped to 49% from 63% last week. Preliminary Q1 GDP growth is expected at 1.4%, while Core PCE inflation is projected to rise by 0.3% MoM and 2.8% YoY in April. UBS forecasts gold hitting $2,600 by 2024’s end, while Citi predicts $3,000 per ounce in the next 6-18 months.
Therefore, the weakening US dollar, coupled with the Fed’s hawkish stance, may support silver prices. However, if inflation remains subdued and economic indicators strengthen, silver may face downward pressure.
Escalating Conflict in Gaza Fuels Market Uncertainty
On the geopolitical front, the conflict between Israel and Palestinian groups in Gaza continues with no signs of stopping. An Israeli airstrike triggered a fire that killed 45 people in a tent camp in the Gazan city of Rafah, officials said on Monday. Israeli airstrikes are destroying homes and pushing many Palestinians to leave.
Some Israeli leaders want to take control of Gaza again. Therefore, the ongoing conflict in Gaza contributes to uncertainty in global markets, potentially leading investors to seek safe-haven assets like silver, which could further support its price.
Short-Term Forecast
Silver (XAG/USD) is expected to face resistance at $31.87, with support at $30.95. Key US economic data and Fed speeches may influence short-term price movements, potentially strengthening the US dollar and affecting silver’s trend.
Silver (XAG/USD) Price Forecast: Technical Outlook
Silver (XAG/USD) is trading at $31.36, up 0.27% on the 4-hour chart. The pivot point, marked at $31.87, is critical for determining market direction. Immediate resistance levels are identified at $32.39, $33.11, and $33.60.
On the downside, immediate support is observed at $30.95, followed by $30.06 and $29.44. The 50-day Exponential Moving Average (EMA) is positioned at $30.62, indicating a bullish trend as the current price is above this level. The 200-day EMA stands at $28.66, reinforcing long-term support.
The outlook for silver remains bearish below the pivot point of $31.87. A break above this level could shift sentiment to a bullish bias, with higher resistance levels to target. Conversely, staying below $31.87 may lead to further downside pressure.
