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Silver (XAG) Daily Forecast: Up 1.25% to $29.60; More Upside Ahead?
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Key Points:
- Silver holds steady at $29.54 despite the US dollar reaching a nearly one-month high.
- Geopolitical tensions between Hamas and Israel could drive investor demand for safe-haven assets like silver.
- Stronger US job data suggests delayed Fed rate cuts, keeping Treasury yields high and limiting silver gains.
Market Overview
Despite the US dollar’s rise to a nearly one-month high, silver remains steady around $29.54 due to investor demand for safe-haven assets amid geopolitical tensions and market uncertainty.
Hamas accuses Israel of a severe war crime in its attack on the Nuseirat refugee camp, resulting in casualties, including children. Israel denies the allegation. This may heighten geopolitical tensions, impacting safe-haven assets like silver.
Additionally, a stronger US NFP report suggests the Fed might delay rate cuts, keeping US Treasury bond yields high and supporting the US dollar. This strength in the dollar limits gains in silver prices.
Impact of Gaza Conflict on Global Markets and Safe-Haven Assets
Hamas accuses Israel of a serious war crime in its attack on the Nuseirat refugee camp, which allegedly killed three people, including a US citizen, a claim Israel denies. The death toll in Gaza rises to 274, including 64 children, with over 700 Palestinians injured.
Israeli war cabinet minister Benny Gantz quits, blaming Prime Minister Netanyahu for failing in the Gaza war and calling for early elections. The conflict has seen 37,084 killed and 84,494 injured in Gaza since October 7, with Israel reporting 1,139 deaths and ongoing captives in Gaza.
The ongoing conflict between Hamas and Israel, along with the rising death toll and political upheaval in Israel, could create uncertainty and volatility in global markets, including safe-haven assets like silver.
Investors may seek refuge in precious metals like silver, possibly leading to an increase in its price due to heightened geopolitical tensions and concerns about stability in the region.
US Dollar Strength and Job Data Impact on Silver
The US dollar strengthened following positive job data, exerting downward pressure on silver prices. The Nonfarm Payrolls report for May exceeded expectations, prompting investors to adjust their forecasts for a Federal Reserve interest rate cut in September.
This maintained elevated Treasury bond yields and pushed the US Dollar to its highest level in nearly a month.
The probability of a September rate cut dropped from 70% to around 50%, with markets now projecting only one 25-basis-point reduction later in the year, possibly in November or December.
The NFP report showed the US economy added 272,000 jobs in May, surpassing the expected 185,000. Despite the unemployment rate rising to 4.0%, strong job growth and a 4.1% increase in Average Hourly Earnings could necessitate prolonged high-interest rates.
Therefore, strong US job data bolstered the dollar, pressuring silver prices by reducing the likelihood of Fed rate cuts, keeping Treasury yields high, and limiting silver gains.
Short-Term Forecast
Silver prices are expected to remain volatile, hovering around $29.59. Watch for a potential bullish breakout above $29.69 or a bearish trend if prices fall below the $29.12 pivot point.
Silver is currently trading at $29.59, up 1.25%. The 4-hour chart indicates a pivot point at $29.12, which is crucial for determining market direction. Immediate resistance levels are set at $29.69, $30.04, and $30.34. On the downside, immediate support is at $28.75, followed by $28.37.
The 50-day Exponential Moving Average (EMA) is at $30.39, and the 200-day EMA is at $29.47, suggesting potential resistance ahead. Silver remains bullish above the $29.00 level, but a break below this pivot point 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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