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Silver (XAG) Daily Forecast: XAG Hits $29 Amid Global Uncertainties; Correction Ahead?

By:
Arslan Ali
Updated: Apr 16, 2024, 09:58 GMT+00:00

Key Points:

  • Silver (XAG/USD) surged to $29.02 today, driven by increased demand amid global uncertainties.
  • Rising geopolitical tensions in the Middle East cast a shadow on silver prices.
  • Speculations on delayed Fed rate cuts suggest potential constraints on silver's upside momentum.
Silver (XAG) Daily Forecast: XAG Hits $29 Amid Global Uncertainties; Correction Ahead?

In this article:

Market Overview

Silver price (XAG/USD) surged today, reaching an intraday high near $29.02, driven by rising demand amid global uncertainties. As investors seek safe-haven assets amidst economic and geopolitical instability, Silver remains a favorable choice. The looming uncertainty regarding potential Federal Reserve interest rate cuts adds to market tension, fostering a cautious yet optimistic sentiment towards silver prices.

Impact of Worsening Middle East Crisis on Silver Price (XAG/USD)

The recent escalation of tensions in the Middle East has cast a shadow on the silver price (XAG/USD), despite its mild bullish performance. Iran’s aggressive actions, such as the launch of drones and missiles at Israel, have exacerbated geopolitical tensions in the region.

However, Iran’s efforts to avoid further escalation could alleviate immediate concerns about major conflicts, potentially bolstering market sentiment. Consequently, this improvement in risk sentiment may exert negative pressure on safe-haven assets like silver (XAG/USD), as investors pivot towards riskier alternatives, diminishing demand for safe-haven options.

Market participants are closely monitoring geopolitical developments in the Middle East, recognizing their significant influence on market sentiment and commodity prices.

Speculations on Federal Reserve’s Rate Policy and Its Impact on Silver Price (XAG/USD)

Expectations of a delay in anticipated rate cuts have emerged, with the first cut now anticipated in September rather than June. This shift in expectations is driven by concerns regarding persistent inflation and a robust US economy. The anticipation of prolonged higher interest rates has implications for precious metal prices, including Silver.

Higher interest rates typically strengthen the US dollar, rendering dollar-denominated commodities like Silver relatively more expensive for investors using other currencies. Consequently, this scenario may constrain the upside potential for Silver prices in the immediate future.

Impact of Upbeat US Retail Sales Data on Silver Price (XAG/USD)

 

The Silver price (XAG/USD) has been impacted by the release of upbeat US Retail Sales data for March. The data, reported by the US Census Bureau, revealed a 0.7% month-on-month (MoM) increase, surpassing expectations of a 0.3% rise. This robust growth, exceeding the previous month’s revised figure of 0.9%, reflects strong consumer spending and hints at potential inflationary pressures ahead.

As a result, the positive retail sales figures have bolstered the US Dollar, posing a challenge for Silver prices. A stronger dollar typically dampens demand for commodities like Silver, exerting downward pressure on their prices.

Silver (XAG/USD) Price Forecast

Silver Price Chart
Silver Price Chart

Silver prices today faced a downward adjustment, trading at $28.69, a decrease of 0.65%. Currently, the metal struggles slightly below the crucial pivot point set at $28.09. Despite this dip, the overarching trend supported by a solid upward channel suggests potential for rebound above this level. Immediate resistance is observed at $29.57, with further barriers at $30.51 and $31.48 that could cap upward movements.

Conversely, if the downward pressure persists, silver could test support levels at $27.32, extending to $26.28 and potentially as low as $25.37.  The 50-day and 200-day Exponential Moving Averages at $27.84 and $25.80 respectively provide a technical backdrop, suggesting a possible consolidation phase near the $28.69 mark. A breach below $28.09 could precipitate a sharper 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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