Silver Prices Forecast: XAG/USD Holds Ground as US Economic Data Looms

Silver Prices Steady as Traders Eye US Economic Data

Silver prices held steady on Tuesday, with traders taking a cautious stance ahead of key US economic releases later this week. The precious metal’s performance reflects a delicate balance between global economic uncertainties and anticipation of future Federal Reserve policy decisions. Today’s trading is seeing minimal price movement as market participants await clarity on inflation trends and potential interest rate trends.

Gold’s Influence on Silver

Silver traders are closely following gold’s movements, as the two metals often exhibit correlated price action. Gold prices have recently decoupled from traditional drivers, with Chinese sentiment playing a significant role. Highly leveraged positions from new market participants in China are supporting both gold and silver prices.

Yuan Weakness Boosts Demand

The Chinese yuan reached its weakest level against the US dollar since mid-November, fueling demand for gold and silver as currency hedges. This trend has persisted, with the yuan on track for its sixth consecutive monthly decline in June.

Western Investors Await Economic Data

Traders in Western markets are focused on upcoming economic releases:

• US Q1 GDP estimates (Thursday)
• Personal Consumption Expenditures (PCE) price index (Friday)

These reports will provide valuable information about inflation trends and overall economic health, potentially influencing precious metals prices.

ETF Flows and Market Sentiment

Global gold ETFs experienced modest inflows last week, totaling $212 million or 2.1 metric tons. However, net outflows since the start of 2024 remain substantial at $7.3 billion, according to World Gold Council data.

Market Forecast: Cautiously Bullish

The short-term outlook for silver appears cautiously bullish. Chinese demand and potential weakness in the US dollar could support prices. However, uncertainty surrounding Fed policy and mixed ETF flows suggest potential volatility. Traders should closely monitor upcoming economic data for clearer directional signals in the silver market.

Technical Analysis

XAG/USD is trading in a tight range on low volume on Tuesday. The price action suggests traders are waiting for key economic reports later in the week before making a major move.

Technically, the short-term direction is likely to be determined by trader reaction to the 50-day moving average at $29.19. However, due to the erratic nature of the market lately, it’s hard to determine whether we’ll get a spike in either direction of the start of a slow grinding trend.