Silver Prices Forecast: XAG/USD’s Outlook Turns Bearish Amid Economic Indicators

Highlights

• Silver struggles below key $24 resistance, raising questions of trend reversal.
• Market cautiously awaits pivotal U.S. economic indicators and Fed’s rate decision.
• Bearish short-term outlook underscored by lofty U.S. Treasury yields and strong dollar.

Silver Market Eyes Key Levels Amid Volatile Catalysts

Silver (XAG/USD) prices are struggling to sustain the momentum from their recent surge, hovering below the crucial $24 resistance level. After a staggering 14.5% gain in just twelve days, silver is losing steam, possibly due to traders taking profits. It’s still early to discern whether this is a pause or the beginning of a more significant trend reversal.

Upcoming Economic Indicators Add Uncertainty

Investors are currently treading cautiously as pivotal U.S. economic data points loom large. Markets are keenly awaiting the U.S. third-quarter GDP figures, the PCE inflation index, and the Federal Reserve’s policy decision. A speech from Jerome Powell, Fed Chairman, has also added to the cautious atmosphere. Powell emphasized the central bank’s commitment to tempering inflation, leaving the market to believe that the status quo on interest rates will likely be maintained in the upcoming Federal Open Market Committee meeting.

Geopolitical Concerns Take a Back Seat

Geopolitical tensions, particularly in the Middle East, have so far failed to significantly lift silver as a safe-haven asset. The conflict between Israel and Hamas in the Gaza Strip has drawn global attention, but hopes for a ceasefire have softened the immediate demand for safe-haven assets like silver.

U.S. Treasury Yields and the Dollar in Focus

U.S. Treasury yields remain near 16-year highs even after a slight pullback below 5%. Bill Ackman’s recent move to cover his bond short position hinted at bonds possibly becoming more attractive. Meanwhile, the U.S. dollar has shown strength against a basket of currencies, further pressuring silver prices.

Short-Term Outlook: Bearish

Given the impending economic indicators and the fading safe-haven appeal, the short-term outlook for silver leans bearish. The market is treading water beneath the key resistance levels, and a strong dollar coupled with lofty U.S. Treasury yields could continue to weigh on prices in the near term.

Technical Analysis

The current daily price of Silver (XAG/USD) at 22.91 is slightly below both the 50-day moving average of 22.95 and the 200-day moving average of 23.31. This positions the asset in a bearish stance for both short-term and long-term perspectives.

Silver is hovering close to its minor support level at 22.23, well above the main support at 20.66. Meanwhile, minor and main resistance levels are observed at 23.55 and 24.50, respectively.

Given these technical indicators, the market sentiment for silver is currently bearish, bolstered by its performance relative to both the 50-day and 200-day moving averages.