Silver Prices Forecast: Market Volatility Ahead as Economic Data Unfolds

Silver Prices Steady as Markets Eye Economic Data and Fed Decisions

Silver prices held relatively stable on Monday, following an impressive 16.734% gain in the second quarter. Traders are balancing recent gains against upcoming economic data that could shape the Federal Reserve’s interest rate decisions.

At 11:08 GMT, XAG/USD is trading $29.25, up $0.10 or +0.35%.

Treasury Yields and Inflation Insights

U.S. Treasury yields edged higher, with the 10-year yield increasing by 7 basis points to 4.412% and the 2-year yield rising over 3 basis points to 4.758%. These movements come in response to recent inflation data and anticipation of key economic releases. The personal consumption expenditures (PCE) price index showed inflation at its lowest annual rate in over three years for May. Core PCE, which excludes volatile food and energy prices, met Dow Jones estimates with a 0.1% monthly increase and a 2.6% annual rise.

Labor Market Focus

Investors are eagerly anticipating this week’s labor market data, including May’s job openings, ADP’s private payrolls report, and the comprehensive June jobs report. These figures are crucial as they could significantly influence the Federal Reserve’s rate cut trajectory. Currently, the market sees a 63% probability of a Fed rate cut in September, with expectations of an additional cut in December.

Forex Impact

The euro’s strength following French election results has put pressure on the U.S. Dollar Index. This weakness in the greenback typically supports dollar-denominated assets like silver, potentially providing additional upside for the metal.

Fed Communications and Market Sentiment

Attention is turning to Fed Chair Jerome Powell’s upcoming remarks on Tuesday and the release of minutes from the latest Fed policy meeting on Wednesday. Powell is likely to maintain a data-dependent stance, potentially impacting silver prices based on his assessment of economic conditions. The market is also awaiting manufacturing sector data and construction spending figures due on Monday.

Short-term Market Outlook

The immediate outlook for silver remains cautiously optimistic. Technical analysts are watching the $28.00 level as a key support area. Some market observers are projecting silver prices could reach as high as $35.00 by year-end, primarily driven by anticipated Fed rate cuts. However, this forecast is contingent on continued economic data supporting monetary easing.

Technical Analysis

The silver price chart displays an uptrend since March 2024, currently at $29.24. Key supports are at $28.66, $26.90, and $26.17. Rising 50-day and 200-day MAs indicate bullish momentum. The 50-day MA at $29.25 is a potential trigger for upside acceleration. Resistance levels are visible at $30.59 and $32.48.