SLV

Silver Prices Forecast: XAG/USD Rises on Dovish Central Bank Signals

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Highlights

  • Silver gains on 2024 Fed rate cut prospects.
  • Fed officials’ dovish statements boost silver.
  • Central banks’ inflation response impacts silver prices.

Silver Advances on Fed Rate Cut Prospects

Silver (XAG/USD) is trading higher, up $0.03 at $24.08, bolstered by expectations of Federal Reserve rate cuts in 2024. The metal’s steady hold above $23.50 reflects trader anticipation of a shift in Fed policy, following last week’s indication of an end to the tightening phase.

Influence of Federal Reserve Policy

The Federal Reserve’s recent signals hinting at an end to its tightening phase have played a significant role in shaping market expectations. Traders are closely monitoring statements from Fed officials, who have indicated that rate cuts may be on the horizon for 2024. This dovish pivot, especially in light of recent economic data, is fueling optimism in thesilver market

Fed Officials’ Statements and Market Impact

Statements from key Fed officials, such as Atlanta Fed President Raphael Bostic, have further influenced market dynamics. Bostic’s recent remarks on the absence of “urgency” to reduce rates, considering the strength of the economy, have been a critical factor for traders. These comments, alongside other Fed communications, are key determinants in the short-term movement of silver prices.

Bank of England’s Stance Amid Inflation Data

Global economic indicators are also in focus, with U.S. inflation data and recent lower-than-expected U.K. inflation figures drawing investor attention. Despite its previous hawkish stance, today’s U.K. inflation data might prompt the Bank of England to consider a dovish pivot, which could further support silver prices.

Silver Market’s Short-Term Forecast

In the short term, silver’s outlook is bullish, influenced by a weaker dollar and falling Treasury yields. The current trend of lower inflation may prompt central banks, particularly the Federal Reserve, to adopt a more dovish stance, which could further fuel silver’s rise. The forthcoming U.S. PCE index report is crucial as it will play a significant role in shaping the Fed’s policy direction and thus impact silver’s price trajectory.

Technical Analysis

Daily Silver (XAG/USD)

Silver (XAG/USD), currently trading at 24.09, is positioned slightly above both its 200-day and 50-day moving averages, indicating a stable to bullish trend.

This current price is near the minor resistance level of 24.50, suggesting a potential test of this threshold. With the main support set at 22.23, the market shows room for downward movement without breaking its overall uptrend.

The proximity to minor resistance and staying above key moving averages point towards a cautiously bullish market sentiment. However, the closeness to the minor resistance level also implies a need for vigilance, as a breakout above this could signal a stronger bullish momentum, while a reversal could see a test of lower support levels.

This article was originally posted on FX Empire

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