Silver (XAG) Daily Forecast: Geopolitical Tensions Boost Demand at $32.25; More Buying? -

Market Overview

During the Asian session, Silver prices (XAG/USD) failed to extend their three-day winning streak and slipped to hit an intraday low of $31.82. This downward trend is attributed to recent hawkish statements from several Federal Reserve officials and stronger-than-expected US economic data, which reduce the likelihood of a Fed rate cut in September. This strengthens the US dollar (USD) and exerts pressure on silver prices.

Conversely, the ongoing conflict between Israel and Hamas, coupled with international condemnation of airstrikes, increases market uncertainty. This boosts demand for safe-haven assets like silver, helping to limit its losses.

Looking ahead, traders are focused on the Fed’s Beige Book and John Williams’ speech on Wednesday. Additionally, the upcoming release of the US Core Personal Consumption Expenditures Price Index (Core PCE) on Friday, expected to show a 0.3% month-over-month (MoM) and 2.8% year

Federal Reserve’s Hawkish Stance and Consumer Confidence Impact on Silver Price

In the US, the broad-based US dollar has been gaining traction and edged higher, fueled by hawkish comments from Federal Reserve officials and better-than-expected economic data. This reduces the likelihood of a Fed rate cut in September, strengthening the US dollar and pressuring silver prices.

Fed Governor Michelle Bowman supported a slower pace of reducing stimulus, while Fed Minneapolis President Neel Kashkari emphasized waiting for significant progress on inflation before considering rate cuts. He expects at most two rate cuts in 2024.

On the data front, Consumer Confidence in May showed a slight improvement, as reported by the Conference Board on Tuesday. The index increased to 102.0 from 97.0 in April, surpassing the expected 95.9. This indicates growing optimism among consumers, which could positively impact economic activity and market sentiment.

Therefore, the hawkish stance of the Fed, coupled with improved consumer confidence, led to a mixed impact on silver prices. Heightened economic optimism could boost industrial demand, while a stronger US dollar may weigh on precious metal prices.

Geopolitical Tensions Drive Investors Towards Safe-Haven Assets

Rising tensions in the Middle East are pushing investors toward safe-haven assets like silver, helping to limit its losses. Recent Israeli attacks on a tent camp near Rafah resulted in civilian casualties, prompting international concern and an emergency UN Security Council meeting.

Spain, Ireland, and Norway have formally recognized the state of Palestine amidst the ongoing conflict between Israel and Hamas. Despite humanitarian aid efforts, the situation remains dire, with millions displaced and casualties increasing in Gaza.

Consequently, these geopolitical tensions are supporting silver prices amid heightened uncertainty.

Short-Term Forecast

Traders are focused on the Fed’s Beige Book and the upcoming US Core PCE Price Index. Immediate resistance levels for silver are $32.39, $32.96, and $33.60, with support at $31.26, $30.71, and $30.06. The current price is $32.25, up 0.33%.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $32.25, up 0.33%. On the 4-hour chart, the pivot point is at $31.87. Key resistance levels are positioned at $32.39, $32.96, and $33.60. Immediate support levels are $31.26, $30.71, and $30.06. The technical indicators reveal the 50-day Exponential Moving Average (EMA) at $30.92 and the 200-day EMA at $28.85.

Silver has broken above the downward trendline around $31.85, indicating a potential bullish trend. The next target on the upside is $32.40, aligning with a double top pattern. If this level is surpassed, the price could further rise to $32.96 and $33.60. However, if silver drops below the pivot point at $31.87, it may trigger a significant selling trend.

This article was originally posted on FX Empire


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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