Silver (XAG) Daily Forecast: Climbs to $27.34, Uptrend Expected to Continue

By:

Arslan Ali

Updated: May 8, 2024, 07:30 GMT+00:00

Key Points:

Silver (XAG/USD) remains strong at $27.39, briefly touching $27.41 amid global tensions, boosting its status as a safe-haven asset.
Weaker-than-expected U.S. jobs data spur rate cut speculations, propelling silver upward as the dollar weakens.
Continued military actions in Gaza despite ceasefire talks enhance silver's appeal as investors seek stability amid geopolitical unrest.

In this article:

Silver

-7.29%

Market Overview

The price of Silver (XAG/USD) sustained its upward trend, holding around the $27.34 level, peaking briefly at $27.40. This rise is likely influenced by the ongoing geopolitical strife and market uncertainty, enhancing its appeal as a safe-haven asset.

The recent U.S. job reports, weaker than anticipated, fueled speculations about potential Federal Reserve rate cuts later in the year, contributing to the U.S. dollar’s decline and bolstering silver’s value.

Additionally, escalating conflicts in Gaza, underscored by ongoing Israeli military actions despite ceasefire negotiations, have heightened the demand for stable investments like silver, possibly pushing its prices higher.

Hawkish Fed Remarks Could Weaken Silver Prices Amid Rate Cut Uncertainty

Despite April’s weaker-than-expected employment data hinting at potential rate cuts, recent hawkish statements from Federal Reserve officials could undermine these expectations and negatively affect silver prices. The anticipated speeches from Fed policymakers Philip Jefferson, Susan Collins, and Lisa Cook are expected to reinforce the US dollar, which could apply downward pressure on silver.

Neel Kashkari, President of the Minneapolis Fed, indicated that rate reductions might be considered if inflation trends downward. Conversely, Richmond Fed President Thomas Barkin contends that the current interest rates are adequate for controlling inflation.

Markets are currently forecasting approximately 50 basis points in rate cuts for 2024, with significant anticipation of a 25 basis point reduction in September, as per CME’s FedWatch Tool. The forthcoming University of Michigan’s Consumer Sentiment Index, projected to fall from 77.2 to 76.0 in May, will also be a focal point for those trading in silver this Friday.

This scenario underscores how Fed officials’ hawkish stances might suppress any budding optimism about rate cuts in 2024, potentially bolstering the US dollar and causing silver prices to retreat.

Geopolitical Tensions in Gaza Drive Safe-Haven Demand

On the geopolitical front, renewed conflict in Gaza has sparked safe-haven demand due to heightened uncertainty. Israeli troops launched strikes on Gaza’s southernmost city, despite a ceasefire proposal agreed upon by Hamas on Monday. Israel indicated that the ceasefire conditions didn’t meet its requirements, leading to continued tensions.

Hence, the ongoing conflict in Gaza has triggered safe-haven demand, leading to increased uncertainty. This has likely boosted the price of silver as investors seek stability amidst rising geopolitical tensions.

Silver (XAG/USD) Price Forecast

Silver Price Chart

Silver prices exhibited a mild uptick in today’s trading, ascending by 0.23% to $27.34. The technical landscape for Silver shows it trading just above its pivot point at $27.04, suggesting a tentative bullish undertone. Immediate resistance levels for Silver are marked at $27.74, followed by higher thresholds at $28.38 and $28.95, which may restrict upward momentum if approached.

Conversely, support begins at $26.61, with further protective levels at $26.01 and $25.36. These figures could provide a floor for price dips, potentially stabilizing declines. The 50-day and 200-day Exponential Moving Averages, positioned at $27.06 and $26.69, respectively, lend additional support, hinting at possible bullish reversals. Technical indicators and price formations indicate that silver could remain bullish above the $27 mark.

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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