Silver (XAG) Daily Forecast: Surging Above $27 on Fed Rate Cut Speculation

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Published: Aug 7, 2024, 07:05 GMT+00:00

Key Points:

Silver rises to $27.26, driven by expected Fed rate cuts and geopolitical tensions.
Stable equity markets and a stronger USD could limit silver's upward momentum.
Silver may consolidate as traders await the next major economic event.

Silver (XAG) Daily Forecast: Surging Above $27 on Fed Rate Cut Speculation

Market Overview

Silver prices rose to $27.06, peaking at $27.26, driven by expectations of Federal Reserve interest rate cuts and escalating geopolitical tensions. However, gains may be limited by stable equity markets and a stronger US dollar.

The market may enter a consolidation phase due to a lack of significant US macroeconomic data, as traders await the next major economic event to guide their moves.

This pause may maintain stability until a new catalyst emerges.

Fed Rate Cuts and Weak Dollar Drive Silver Price Growth

The U.S. dollar may weaken as markets anticipate Federal Reserve interest rate cuts due to recession concerns. The Fed is expected to lower rates at the September meeting, with a 100% probability of a cut and a 70% chance of a 50-basis-point reduction.

Additionally, U.S. data showed a 2.5% decrease in the trade deficit for June, driven by a 1.5% rise in exports of aircraft and U.S.-produced oil and gas. These factors are likely to keep U.S. bond yields and the dollar subdued.

Lower interest rates reduce the opportunity cost of holding non-yielding assets like silver, while a weaker dollar makes silver cheaper for international buyers.

Middle East Conflict and Fed Rate Cuts Boost Silver Prices (XAG/USD)

Geopolitical tensions have intensified as Hezbollah launched drone and rocket attacks on Israel following the recent killings of a top Hezbollah commander and a Hamas leader by Israel.

These heightened risks, combined with expected Federal Reserve interest rate cuts due to recession concerns, could support silver prices (XAG/USD).

Hezbollah has launched multiple drones into Israel, setting off air raid sirens. In response, Israeli forces have conducted raids in the West Bank, killing at least 12 Palestinians.

Gaza’s Health Ministry reports that recent Israeli attacks have killed at least 40 people and injured 71. Overall, Israel’s conflict with Gaza has resulted in 39,653 deaths and 91,535 injuries.

Short-Term Forecast

Silver prices, currently at $27.06, may rise due to dovish Fed policies and geopolitical risks. However, stronger equity markets and a stable USD might limit this momentum.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $27.06, reflecting a 0.84% increase. The current pivot point is $27.50, indicating a critical threshold for market direction. Immediate resistance is at $28.08, with further levels at $28.60 and $29.15.

Support levels are positioned at $26.64, $26.15, and $25.63. The 50-day EMA stands at $28.02, while the 200-day EMA is at $29.07, suggesting a bearish outlook. The market is bearish below $27.50, but breaking above this level could enhance bullish sentiment.

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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