Silver Prices Forecast: XAG/USD Resilient but Remains on Shaky Ground

Highlights

• Silver counters multi-month lows.
• Fed’s high-interest rate concerns rise.
• Global shifts impact silver’s trajectory.

Silver’s Fate Amidst Market Turbulence

Silver (XAG/USD) prices are on the rise this Friday, shaking off their multi-month lows, as the U.S. dollar and bond yields take a dip. Despite this, silver is gearing up for its fourth weekly decline, a result of heightened concerns over the Federal Reserve’s prolonged high-interest rate stance.

Federal Reserve’s Stance & Market Dynamics

The Federal Reserve’s commitment to keeping interest rates elevated has been fueling market dynamics. Recent data showcases a solid U.S. economy, which intensifies the likelihood of the Fed hiking rates once more this year. The release of minutes from the Fed’s July assembly revealed that officials are torn over the necessity for additional hikes. With most members focusing on inflation control, the debate over economic risks remains intense. Investors are now poised for Fed Chair Jerome Powell’s forthcoming address on the economic perspective scheduled for Aug. 25.

Global Economic Indicators

On the global front, Japan’s core consumer inflation has slowed, but it has remained above the Bank of Japan’s target for a consistent 16 months. Conversely, in China, Evergrande, a significant property developer grappling with massive debts, is now seeking protection from its creditors in U.S. courts.

Negative Factors Capping Gains

The current scenario presents a dichotomy for silver. Short-term indicators suggest the metal might be oversold. However, from a broader perspective, the market is besieged by a myriad of negative forces, creating a cascading effect that is hard to break. Benchmark 10-year U.S. Treasury yields and the dollar index’s movements also continue to play a pivotal role in determining silver’s allure for international buyers.

Short-Term Forecast

The silver market is weathering a storm, showcasing some tenacity amidst market volatilities. Speculations run high about the Fed’s next move regarding interest rates. Regardless of whether another hike transpires soon, the silver market has felt its impact. Observers believe that any formidable rally for silver might only materialize once the Fed considers slashing rates, potentially around mid-2024.

In essence, silver’s journey is set against a backdrop of global economic shifts and Federal Reserve speculations, making it a precious metal to watch closely in the coming months.

Technical Analysis

Silver’s current 4-hour price stands at 22.79, slightly below the previous 4-hour close of 22.83, indicating a marginal downtick in the recent timeframe. When we assess the commodity against its moving averages, we find it hovering above the 50-4H moving average of 22.69, suggesting an underlying bullishness. However, it’s below the 200-4H moving average at 23.73, pointing to a broader bearish trend. The 14-4H RSI reads 55.15, indicating a somewhat stronger momentum but still reasonably close to the neutral zone.

The current price is snugly positioned between the main support area (22.70 to 22.28) and just below the main resistance zone (23.60 to 23.85). In summary, while Silver showcases a minor bullish undertone in the short term, the overarching sentiment leans slightly bearish.