Silver (XAG) Daily Forecast: Trading Above $29; Fed Rate Cut Speculations

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Published: Jun 28, 2024, 06:43 GMT+00:00

Key Points:

Silver maintains an upward trend around $29.14 despite a strong US dollar and risk-on sentiment.
Softer US macroeconomic data fuels speculation of a Fed rate cut, boosting silver's appeal.
Geopolitical tensions in the Middle East and Russia-Ukraine conflict enhance silver's safe-haven status.

Silver (XAG) Daily Forecast: Trading Above $29; Fed Rate Cut Speculations

Despite the renewed strength of the US dollar and a risk-on market sentiment, silver (XAG/USD) has maintained its upward trend, trading well around the $29.14 level and reaching an intraday high of $29.18.

This trend can be attributed to softer US macroeconomic data, which has fueled speculation about the Federal Reserve’s potential rate-cutting cycle this year, triggering a short-covering rally in the silver market.

Additionally, geopolitical tensions in the Middle East and the prolonged Russia-Ukraine conflict have boosted silver’s safe-haven appeal.

Mixed Signals from US Economic Data and Fed Comments

In the US, the broad-based dollar gained traction, advancing to a fresh two-month high following comments by Fed Governor Michelle Bowman. Bowman stated, “We are not at a point yet to consider a rate cut,” citing persistent inflation risks. However, this strength might be short-lived as softer macroeconomic data released on Thursday heightened expectations for a Fed rate cut this year.

Recent data showed US real GDP growth for Q1 revised up to a 1.4% annualized pace, the slowest rise since spring 2022, and a sharp slowdown from the previous quarter’s 3.4%. Durable Goods Orders in May increased by 0.1%, against expectations of a 0.1% decline, though down from April’s revised 0.6% growth.

Initial Jobless Claims fell to 233,000 in late June, but the four-week average rose to 236,000, the highest since last September. Additionally, US Pending Home Sales unexpectedly dropped by 2.1% in May, marking the lowest level since 2001, indicating a cooling housing market.

Silver’s Resilience and Market Outlook

Despite the recent strength of the US dollar, silver has gained momentum, buoyed by expectations of a potential Federal Reserve rate cut following softer US economic data. Traders are cautious, holding back on strong market moves and awaiting further clarity on the Federal Reserve’s policy stance.

The upcoming release of the US Personal Consumption Expenditures (PCE) Price Index is expected to provide further insights into the Fed’s decision-making process.

In summary, silver’s upward momentum continues despite the strengthening US dollar, driven by softer economic data and ongoing geopolitical tensions. Market participants are keenly awaiting the PCE Price Index release, which could offer more direction on the Fed’s potential rate cuts and their impact on the broader market.

Short-term Forecast

Silver’s upward trend continues despite a strong US dollar, trading around $29.14. Watch for a break below $28.71, which could signal a sharp sell-off.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $29.14, up 0.11%. On the 4-hour chart, the pivot point is at $28.71. Key resistance levels are at $29.26, $29.70, and $30.02, while immediate support is at $28.32, followed by $27.99 and $27.62.

The 50-day EMA stands at $29.34, and the 200-day EMA is at $29.44. Silver remains bullish above the pivot point of $28.71. However, a break below this level could trigger a sharp selling trend.

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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