Silver Prices Forecast: XAG/USD Rides Geopolitical Waves Amid Israel-Hamas Conflict

Highlights

• Silver fluctuates on Israel-Hamas conflict
• U.S. monetary policy also sways prices
• Short-term forecast leans bullish

Safe Havens in Turbulent Times

Silver’s (XAG/USD) price witnessed a roller-coaster ride as the Israel-Hamas conflict escalated and investors eyed geopolitical developments along with U.S. monetary policy. After touching a high of $22.82 last Friday, its highest level since September 29, silver retreated as traders engaged in technical selling and profit-taking. The metal had surged 4%, registering its first weekly gain in three weeks, driven primarily by investors flocking to safe-haven assets amid heightened Middle East tensions.

Key Price Points and Geopolitical Factors

The spotlight remains on silver as traders consider it an asset to park money during geopolitical uncertainties. Prices had broken above the significant $22.00 ceiling and are now expected to retest the resistance at $23.78 per ounce. If Middle East tensions continue to escalate, a dip to $21.75 could provide a lucrative entry point, but bears should exercise caution. Ground operations by Israeli forces add another layer of volatility, fueling more inflows into safe-haven assets like silver.

U.S. Monetary Policy and Market Sentiment

In addition to geopolitical factors, U.S. monetary policy is also influencing silver prices. Despite a rise in U.S. consumer prices, expectations remain high that the Federal Reserve will keep interest rates steady, lending additional support to the zero-yield asset. Investors are keenly waiting for Federal Reserve Chair Jerome Powell’s upcoming speech, balancing it against developments in the Middle East conflict.

The Balancing Act of Risks

Investors have been walking a tightrope, keeping one eye on the Middle East and another on U.S. monetary policy. The Israel-Hamas conflict threatens to involve other nations, which could further impact financial markets and boost safe-haven assets. U.S. President Joe Biden’s stance on eliminating Hamas adds another layer of complexity, intensifying investor focus on geopolitical risks.

Short-Term Forecast: Bullish

In the short term, silver appears set on a bullish trajectory. Geopolitical tensions and speculation over the Federal Reserve’s next move are likely to keep silver in traders’ crosshairs. Should these tensions escalate further, silver could aim for the $26.00 mark, offering both risk and reward in an increasingly volatile market.

Technical Analysis

The current Daily price of Silver (XAG/USD) at $22.56 sits below both the 200-day and 50-day moving averages, at $23.34 and $22.90 respectively, suggesting a bearish undertone.

While the market hovers close to the 50-day MA, it’s still below the minor resistance level of $23.55, reinforcing the bearish sentiment. Trend line resistance stands at $24.30, another level yet to be breached for a bullish reversal.

Given these technical indicators, the current market sentiment for Silver appears bearish, but momentum suggests the market may be gearing up to challenge resistance. Overcoming both moving averages and the resistance at $23.55 could trigger an acceleration to the upside.