Silver (XAG) Daily Forecast: XAG/USD Eyes $29 Amid Fed’s Interest Rate Outlook

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Published: Apr 11, 2024, 07:14 GMT+00:00

Key Points:

Silver retreats from $28.53 high; CPI data fuels rate hike speculation, impacting XAG/USD.
Market eyes shift from June to September for Fed rate cut, testing silver's resilience.
Silver’s industrial demand and geopolitical tensions create a complex pricing dynamic.

Market Overview

Silver’s price has seen a slight decline, positioned at around $27.90, retreating from a three-year high of $28.53. This pullback is influenced by the market’s reassessment of the Federal Reserve’s interest rate trajectory, particularly after the U.S. CPI for March suggested persistent inflation, with figures climbing to 3.5% year-on-year and 0.4% monthly.

Interest Rate Outlook

Expectations for the Fed to maintain higher interest rates longer have been reinforced, particularly following the hotter-than-expected CPI data. This anticipation has led to a shift in the market’s view, pushing the potential timeline for rate cuts from June to September, as indicated by the CME FedWatch Tool.

Industrial Demand

Silver’s industrial demand, coupled with its role as a safe-haven asset amidst geopolitical tensions, particularly in the Middle East, provides a supportive base for its price. However, the metal’s attractiveness is tested against the backdrop of rising interest-bearing asset yields.

Upcoming Economic Events

Attention is now on the forthcoming U.S. economic data, with the Core PPI for March anticipated at 0.2% month-over-month, a decrease from the previous 0.3%. Moreover, the market is set to assess the impact of these figures on the Fed’s policy direction, with key speeches from FOMC members expected to offer further insights.

Silver (XAG/USD) Price Forecast

Silver – Chart

Silver (XAG/USD) is currently trading at approximately $27.90, showing minimal change after a previous session decline of 0.78%. The market’s pivot point stands at $28.50, indicating a critical juncture for future price direction. Resistance levels are identified at $29.06, $29.57, and $30.26, suggesting potential barriers for upward movement.

Conversely, immediate support is observed at $27.53, with further downside protection at $26.20 and $26.43. The technical indicators, specifically the 50-day EMA at $24.88 and the 200-day EMA at $23.70, hint at a bearish sentiment below the pivot point, with a breakout above $28.50 potentially signaling a shift to a bullish outlook. Fibonacci suggests that a drop below $27.52 can potentially leading to further declines towards the $26.91 area.

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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