Silver Prices Forecast: XAG/USD Traders Await FOMC’s Dovish Pivot

Highlights

• Silver prices dip on Monday, defying a weaker U.S. Dollar and rising Treasury yields.
• Discrepancy between silver prices and real yields hints at need for weaker data.
• U.S. job market slowdown, inflation data may prompt Fed’s policy easing.

Silver’s Current Price Action

Silver (XAG/USD) prices are lower on Monday, despite a weakening U.S. Dollar. The slight increase in U.S. Treasury yields is believed to be the primary factor behind this movement. Currently, there is a notable discrepancy between silver’s market price and real yields, suggesting a need for weaker economic data to propel prices above the $25.00 per ounce threshold.

Economic Indicators and Federal Reserve’s Stance

Recent data indicating a slowdown in the U.S. job market and a consumer inflation report falling short of expectations have reignited speculation that the Federal Reserve might ease monetary policies sooner than anticipated. This potential shift in policy direction has led to a decrease in the dollar value and bond yields, enhancing the attractiveness of non-yielding assets like silver for investors.

Dollar’s Influence on Silver Prices

The dollar’s decline to a more than two-and-a-half-month low against other currencies has made silver more affordable for holders of other currencies. Despite this, silver prices edged lower, aligning with the broader market belief that the Federal Reserve’s rate hike campaign might be nearing its end.

Anticipation of FOMC Minutes

Market focus now turns to the upcoming release of the Federal Reserve’s meeting minutes. These minutes are expected to provide further clarity on the Fed’s policy direction, potentially indicating a more dovish approach. The anticipation of what is being termed as a ‘Fed pivot’ could result in softer U.S. Treasury yields and a further weakened dollar, potentially benefiting silver and other risk assets.

Short-Term Outlook:  Silver Prices in a Flux

In the short term, silver prices are likely to be influenced by the Federal Reserve’s policy decisions and economic indicators. The current market sentiment suggests a cautious outlook, with potential for price fluctuations depending on the Fed’s upcoming decisions and the economic data landscape.

Technical Analysis

Analyzing the silver (XAG/USD) market with the provided data, the current daily price of 23.53 is positioned above both the 200-day and 50-day moving averages, at 23.29 and 22.70 respectively. This positioning above both key moving averages indicates a bullish trend in both short-term and long-term perspectives. The proximity of the current price to the minor support level at 23.55 suggests it’s testing a critical support zone. If the price remains above this level, it could reinforce the bullish trend.

Furthermore, the minor resistance level at 24.50 and the trend line resistance at 23.92 are the next significant thresholds to observe. A break above these levels could signal a strengthening bullish momentum.

Given the current price’s position above the moving averages and its approach to these resistance levels, the market sentiment for silver leans towards bullishness, with potential for upward movement if it successfully breaches the identified resistance markers.