Silver (XAG) Daily Forecast: Bullish Above $28.37 Pivot; Eyes on US CPI Today

By:

Arslan Ali

Published: May 15, 2024, 07:32 GMT+00:00

Key Points:

Silver remains under pressure around $28.55, hitting an intraday low of $28.43.
April’s Producer Price Index (PPI) showed a 2.2% annual increase, with Core PPI rising 2.4%.
Geopolitical tensions between Israeli forces and Palestinian armed groups in Gaza continue, leading to significant casualties.

In this article:

Silver

-0.96%

Market Overview

Silver price (XAG/USD) continued its decline, staying under pressure around $28.55 and hitting an intraday low of $28.43. This downward trend is due to hawkish remarks from Federal Reserve officials and strong US Producer Price Index (PPI) data. The rise in PPI and Core PPI indicates growing inflationary pressures, leading to expectations of tighter Federal Reserve monetary policy.

Consequently, investors found the US dollar more appealing, contributing to silver’s decline. However, rising tensions in the Middle East helped limit further losses in the silver price.

Stronger US Dollar; US Inflation Ahead

The US dollar’s strength continues to impact silver prices negatively, propelled by the Federal Reserve’s firm stance on interest rates and positive economic data. In April, the Producer Price Index (PPI) showed a 2.2% annual increase, signaling rising inflationary pressures, while Core PPI ascended by 2.4%.

Fed Chair Jerome Powell remarked that inflation is declining slower than anticipated, suggesting interest rates may remain elevated longer than previously expected. Meanwhile, Kansas City Fed President Jeffrey Schmid warned that inflation is still too high, hinting at further actions by the Fed.

Looking forward, the Consumer Price Index (CPI) is expected to show a slight moderation in April, with headline CPI projected to decrease to 3.4% and Core CPI to 3.6%. Additionally, a downturn is expected in April’s US Retail Sales. The financial markets are beginning to factor in a potential Fed rate cut by September 2024.

Consequently, the stronger US dollar, driven by anticipations of continued high interest rates to combat persistent inflation, has exerted downward pressure on silver prices.

Ongoing Gaza Conflict

Geopolitical tensions between Israeli forces and Palestinian armed groups in Gaza continue, leading to significant casualties, including civilians. Israeli airstrikes have caused widespread destruction, displacing hundreds of thousands of Palestinians.

Some Israeli officials support reoccupying Gaza amid rising tensions. This ongoing conflict contributes to uncertainty in global markets, potentially driving investors to seek safe-haven assets like silver, which could increase its price.

Silver (XAG/USD) Price Forecast

Silver Price Chart

Silver (XAG/USD) is trading at $28.55, down 0.23%. The 4-hour chart shows a pivot point at $28.37, providing a critical level to watch. Immediate resistance levels are at $28.79, $29.24, and $29.64. On the downside, immediate support is at $27.96, followed by $27.53 and $27.10.

Technical indicators suggest a bullish trend. The 50-day Exponential Moving Average (EMA) is at $27.90, while the 200-day EMA stands at $27.07, both supporting upward momentum. Additionally, an upward channel is reinforcing the bullish trend, especially above the $28.35 level.

In conclusion, silver remains bullish above the $28.37 pivot point. A break below this level could trigger a sharp selling trend.

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.

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