Silver (XAG) Daily Forecast: $29 Hold? Bull Breakout or Bounce?

By:

Arslan Ali

Updated: Jun 14, 2024, 10:46 GMT+00:00

Key Points:

Silver gains as USD weakens; prices rise to $29.13, fueled by Fed rate cut expectations.
US inflation eases, lowering bond yields; supports silver prices amid geopolitical tensions.
Technical analysis: Silver finds support at $28.67, with a bullish reversal possible above this level

In this article:

Silver

-1.49%

Market Overview

Silver price (XAG/USD) halted its previous-day decline and gained positive traction around the $29.07 level, reaching an intra-day high of $29.13. This uptick is primarily due to the weakness in the US dollar, which lost some gains amid rising market sentiment.

The decline in the US dollar is further supported by market expectations that the Federal Reserve might start cutting rates as soon as September, due to easing inflationary pressures in the US.

Additionally, persistent geopolitical tensions in the Middle East and renewed political uncertainty in Europe are other key factors bolstering the silver price.

Fed Expectations and Economic Data Influence Silver Prices

Despite the Federal Reserve projecting only one rate cut in 2024, markets are pricing in a greater chance of an earlier rate-cutting cycle, possibly starting in September, due to signs of easing inflation in the US. This has lowered US Treasury bond yields to their lowest levels since April, weakening the Greenback and providing support to silver.

Despite the Federal Reserve projecting only one rate cut in 2024, markets are still pricing in a greater chance that the Fed could begin its rate-cutting cycle as soon as September amid signs of easing inflationary pressures in the US.

This has dragged US Treasury bond yields to their lowest level since April and put pressure on the Greenback, lending some support to the USD-denominated commodity silver.

Economic Data and Market Sentiment

Recent data from the US Bureau of Labor Statistics show the Producer Price Index (PPI) for final demand rose by 2.2% year-over-year in May, below expectations of 2.5% and down from April’s 2.3%.

Core PPI, excluding food and energy, increased by 2.3% annually, also lower than forecasted. Month-on-month, the PPI decreased by 0.2%, while the core PPI remained unchanged.

Wednesday’s Consumer Price Index (CPI) reported no change in May, the first time since last June, with annual inflation easing slightly to 3.3% from April’s 3.4%. Additionally, the US Department of Labor noted a higher-than-expected rise in initial jobless claims to 242,000 last week from 229,000 the previous week.

Overall, the expectation of earlier Fed rate cuts and easing inflation pressures have reduced US Treasury bond yields, weakening the USD and supporting silver prices as a USD-denominated commodity.

Short-term Forecast

Silver (XAG/USD) halted its previous-day decline, gaining positive traction around $29.07, with an intra-day high of $29.13. The uptick is mainly due to the weaker US dollar amid market sentiment and expectations of potential Federal Reserve rate cuts as soon as September.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $29.05, down 0.16% in the 4-hour chart. The key pivot point is at $29.39, which serves as a critical level for the metal’s immediate price movements. Immediate resistance levels are noted at $29.81, $30.24, and $30.79, indicating potential areas where selling pressure could increase.

On the downside, immediate support is found at $28.67, followed by $28.00 and $27.51, which could act as cushions against further declines. Technical indicators highlight the market’s current sentiment. The 50-day Exponential Moving Average (EMA) stands at $29.74, and the 200-day EMA is at $29.45.

There is notable support around the $28.67 level. If silver consolidates above this support, it could indicate a potential bullish reversal. The market remains bearish below $29.40, but a break above this level could shift the bias towards a more bullish outlook.

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.