Silver Price Forecast: Can Key Economic Data Propel Prices Higher?

Silver Prices Edge Higher Amid Key Economic Data Anticipation

Silver prices have shown a modest uptick, marking the second consecutive session of gains. This movement comes as traders eagerly await crucial U.S. economic data that could significantly influence the Federal Reserve’s interest rate decisions.

At 11:10 GMT, XAG/USD is trading $29.28, up $0.04 or +0.15%.

Market Movements

XAG/USD is finding support above the critical $28.57 level, with nervous speculators attempting to establish a firm foundation. The slight dip in Treasury yields is providing additional support for silver prices. Investors are closely monitoring upcoming economic releases, including July’s manufacturing and services PMI data, as well as June’s new home sales figures.

Economic Indicators

Later this week, markets will focus on the second-quarter GDP reading and June’s personal consumption expenditures (PCE) price index. The PCE index, being the Fed’s preferred inflation gauge, could provide valuable insights into the central bank’s monetary policy outlook for its upcoming meeting.

Market Sentiment

Despite the current upward trend, potential challenges loom. Tim Waterer, KCM Trade’s chief market analyst, warns that upside surprises in GDP or core PCE figures could create short-term hurdles for silver due to potential dollar strength. However, the fundamental outlook for silver remains positive, given expectations of impending Fed rate cuts.

Global Factors

India’s recent decision to reduce import duties on silver from 15% to 6% is expected to boost jewelry manufacturing in the world’s second-largest bullion consumer. This move adds to an already favorable demand backdrop for the precious metal.

Price Forecasts

A Reuters poll of 39 analysts and traders predicts silver prices to reach new record highs in the coming months. The median forecast for silver in 2024 is $28 per ounce, up from the previous estimate of $26. Currently trading around $29, silver has already gained 23% this year.

Market Forecast

The short-term outlook for silver appears cautiously bullish as long as the $28.57 support level holds. However, the metal needs a catalyst to turn outright bullish. While factors such as geopolitical tensions, expected monetary easing, and robust demand from the solar power sector support prices, the market faces potential headwinds from economic data releases and price sensitivity in retail and jewelry sectors. Traders should remain alert to volatility around key economic data releases and Fed policy decisions, which could provide the necessary catalyst for a more decisive move.

Technical Analysis

The daily chart price action clearly shows the importance of the main bottom at $28.57. While this level may be strong enough to stop the price slide, the market is likely to remain rangebound as long as it remains below the 50-day moving average at $30.21.

Aggressive traders may find current price levels attractive as long as they are willing to concede $28.57 as their exit. More prudent traders may consider a breakout over the 50-day MA as a confirmation that Silver has turned the corner.