Silver (XAG) Daily Forecast: Closing in on $27.75—Can It Surge to $28.50?

By:

Arslan Ali

Published: Aug 15, 2024, 08:24 GMT+00:00

Key Points:

Silver rallies to $28 as Fed rate cut expectations weaken the US dollar.
Geopolitical tensions in the Middle East drive investors toward silver for safety.
A break above $27.96 could push silver to $28.46; watch for market direction.

In this article:

Silver

-0.29%

Market Overview

Silver (XAG/USD) has rebounded, reaching an intraday high of around $28. This rally is driven by expectations of a September Fed rate cut, which weakens the US dollar and supports silver prices.

Meanwhile, ongoing geopolitical tensions in the Middle East push investors toward silver as a safe-haven asset. Iran’s rejection of Western calls to avoid retaliation against Israel, following the assassination of Hamas leader Ismail Haniyeh, has heightened geopolitical risks.

This conflict underscores silver’s appeal as a safe investment during periods of uncertainty.

Silver Gains as Dollar Weakens, Rate Cut Expectations Drive Market Sentiment

The US dollar is losing momentum as expectations grow for a Federal Reserve rate cut in September, which is supporting silver prices. Investors are closely monitoring upcoming data, including US Retail Sales, Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production.

Recent inflation data for July showed a 0.2% increase in the Consumer Price Index (CPI) month-over-month, with an annual rate of 2.9%. Core CPI, excluding food and energy, also rose by 0.2% month-over-month and 3.2% annually.

Phillip Streible from Blue Line Futures notes that expectations have shifted towards a 25 basis point rate cut rather than 50, dampening silver’s momentum. The probability of a 50 basis point cut has decreased to 41% from 50% before the CPI data release. Cautious Fed officials and the reduced likelihood of a larger cut are adding uncertainty to silver markets.

Gaza Conflict Escalation May Drive Silver Demand as Safe-Haven Asset

Israeli airstrikes hit Hamad City, and artillery damaged buildings in Khan Younis, Gaza, following recent deadly attacks. The US and Israel are sending delegations to Qatar for ceasefire talks, with Hamas open to discussions if Israel shows serious intent.

US Secretary of State Antony Blinken and Qatar’s Prime Minister urged restraint to support negotiations. In the West Bank, Israeli raids killed five, including four in a drone strike, contributing to the conflict’s toll of 39,965 deaths and 92,294 injuries in Gaza.

The escalating conflict and ongoing violence in Gaza could drive investors toward safe-haven assets like silver. This heightened geopolitical uncertainty may boost demand for silver, supporting its price.

Short-Term Forecast

Silver is trading at $27.74, showing indecision. A breakout above $27.96 could target $28.46, while a drop below $27.21 may trigger further selling. Traders should watch closely for direction.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $27.74, up 0.60% today, but the market is showing signs of indecision. On the 4-hour chart, silver is forming a symmetrical triangle, a pattern that typically signals uncertainty among investors.

The price is hovering just below the pivot point at $27.96, with the 50-day EMA at $27.71 providing nearby support.

However, the 200-day EMA at $28.61 looms as a significant resistance level. The trend remains unclear until silver breaks out of this triangle. If it pushes above $27.96, we could see a move toward $28.46 and beyond.

Conversely, a break below $27.21 might trigger further selling. For now, the market’s direction will depend on whether silver can break out of this symmetrical triangle.

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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