Silver (XAG) Daily Forecast: Can Easing Middle East Tensions Drive Sell Today?

By:

Arslan Ali

Published: Apr 22, 2024, 07:24 GMT+00:00

Key Points:

Silver prices drop to $27.78 amid reduced demand for safe-haven assets.
U.S. dollar strength from lower Fed rate cut expectations pressures silver prices.
U.S. dollar strength from lower Fed rate cut expectations pressures silver prices.

In this article:

Silver

-0.66%

Market Overview

Silver prices (XAG/USD) started this week on a bearish track and remained well offered, hitting an intra-day low of 27.78 level. However, the reason for its downward trend can be attributed to the increasing hopes that the Iran-Israel conflict will not escalate further. This undermined the demand for safe-haven assets and contributed to the losses in the Silver price.

On the flip side, the lower Fed rate cut bets are keeping the US dollar price higher, which also exerts downward pressure on the silver price.

Moving ahead, traders are keeping a close eye on this week’s release of flash global PMI prints, the Advance US Q1 GDP report, and the US Personal Consumption Expenditures (PCE) Price Index before placing strong bets.

Impact of Iran-Israel Developments on Investor Sentiment and Safe-Haven Assets

On the geopolitical front, recent developments have sparked optimism among investors regarding the Iran-Israel conflict. Iran’s decision not to retaliate against Israel’s limited-scale missile strike on Friday has eased fears of escalating tensions in the Middle East.

This positive development has boosted investor confidence and shifted their focus away from safe-haven assets like Silver. As a result, Silver prices have faced downward pressure as investors are less inclined to seek out these safe-haven investments amidst reduced geopolitical uncertainty.

Impact of Inflation Concerns and Fed Policy on Silver Prices and XAU/USD Pair

On the US front, concerns about inflation are influencing investor sentiment and impacting Silver prices. However, the belief that the Federal Reserve will maintain higher interest rates due to persistent inflationary pressures is putting downward pressure on Silver.

Investors are delaying their expectations for the first interest rate cut, now anticipated in September, and reducing their bets on the number of rate cuts in 2024. This cautious approach is fueled by Chicago Fed President Austan Goolsbee, who suggests waiting for more clarity on the inflation outlook before making policy decisions.

Furthermore, the strong performance of the 10-year US government bond yield is supporting the US Dollar, further weighing on Silver prices. In contrast to this, the ongoing worries about the global economy slowing down are making people think that major central banks might all cut interest rates together in the second half of this year. This could help the silver prices to limit its deeper losses.

Silver (XAG/USD) Price Forecast

Silver Price Chart

Today’s market action saw Silver prices take a notable dip, trading at $28 per ounce, a decline of 2.68%. This movement positions the metal below its crucial pivot point of $28.05, suggesting potential for further downside. The technical setup indicates immediate support at $27.32, with additional support levels observed at $26.52 and $25.68, which could act as potential stabilizers if the downtrend continues.

Conversely, resistance levels are set at $29.57, $30.51, and $31.48. Overcoming these barriers could signal a reversal of the current bearish sentiment. The 50-day Exponential Moving Average (EMA) at $28.15, slightly above today’s closing price, alongside the 200-day EMA at $26.32, highlight a mixed sentiment in the market.

While the current outlook is bearish below $28.05, a breakout above this threshold could encourage a bullish trend, as indicated by the close proximity of the 50 EMA.

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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