Silver (XAG) Daily Forecast: $27.70 as U.S. GDP Grows 2.1%, Awaiting Fed’s Move

By:

Arslan Ali

Published: Jul 26, 2024, 05:47 GMT+00:00

Key Points:

Silver's current price of $27.71 indicates a broader market downturn.
Strong U.S. GDP growth diminishes silver's appeal as a safe haven.
Upcoming Fed decisions may influence silver prices due to interest rate expectations.

In this article:

Silver

+0.67%

Market Overview

Silver (XAG/USD) is currently experiencing a downturn, trading around $27.71, reflecting broader market trends. As of this week, Silver is navigating a decline, with market participants shifting their focus towards the U.S. dollar in anticipation of forthcoming interest rate decisions.

Impact of U.S. Economic Data on Silver Prices

Recent data revealed a robust U.S. GDP growth rate of 2.1% for the second quarter, surpassing expectations and signalling a strong economic outlook. This vigor in the economy could diminish the appeal of silver as a safe haven, as investors pivot towards riskier assets.

The resilience of the U.S. economy is poised to impact the Federal Reserve’s rate strategy significantly. Key insights are anticipated from the upcoming Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, which is expected to show a mild easing to 3.2% in June.

This data will be crucial in setting the stage for the Fed’s rate decisions in the near term, influencing the XAG/USD price forecast as market dynamics adjust to new economic realities.

Silver’s Response to Federal Reserve Signals

The Federal Reserve’s forthcoming meeting is expected to maintain the status quo on interest rates but may hint at a possible rate cut in September. Such a scenario typically benefits precious metals like silver, reducing the opportunity cost associated with investing in these non-yielding assets.

Geopolitical Climate and Silver Demand

As the U.S. presidential election approaches, with polls suggesting a tight contest, geopolitical uncertainties could drive investors towards silver for its safe-haven properties.

The price of silver (XAG/USD) could see fluctuating demand based on these political developments alongside macroeconomic indicators.

Short-Term Forecast

In the short term, Silver (XAG/USD) faces downward pressure, currently trading at $27.71. Anticipation of Federal Reserve interest rate decisions is diverting investor interest towards the U.S. dollar, further dampening silver’s appeal as a safe haven asset.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) prices have declined to $27.71, reflecting a 0.30% drop. The 4-hour chart identifies a pivot point at $28.06, serving as a crucial level. Immediate resistance levels are $28.57, $28.96, and $29.46. On the downside, support levels are at $27.42, $26.96, and $26.54.

The 50-day EMA is at $29.24, and the 200-day EMA is at $29.76, indicating a bearish trend. The downward trendline is expected to keep silver bearish below $29, with the pivot point at $28, adding more selling pressure. The outlook remains bearish below $28.06.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.