Silver (XAG) Daily Forecast: Geopolitical Tensions Push Prices to $30.80; Buy Now?

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Published: May 27, 2024, 07:02 GMT+00:00

Key Points:

Silver prices rose to $30.80, peaking at $30.92, driven by Middle East tensions.
Strong U.S. economic data and hawkish Fed remarks have limited silver's gains.
Higher U.S. interest rates have strengthened the dollar, making silver less attractive.

Silver (XAG) Daily Forecast: Geopolitical Tensions Push Prices to $30.80; Buy Now?

Market Overview

Despite strong U.S. economic data and hawkish Fed remarks, Silver (XAG/USD) gained traction, trading around $30.80, peaking at $30.92. The rise is linked to risk-off sentiment due to escalating Middle East tensions, notably Israeli airstrikes in Rafah.

Stronger-than-expected U.S. economic data and hawkish Fed comments dampened rate cut expectations, limiting silver’s gains. Higher interest rates bolstered the U.S. dollar, making silver less appealing as an alternative asset.

Economic Data and Monetary Policy on Silver Prices

Recent robust U.S. economic data and hawkish Federal Reserve statements have reduced expectations for interest rate cuts, with markets now anticipating only one cut by year-end. This has influenced investor strategies, impacting assets, including cryptocurrencies, as the Fed may maintain current rates longer to address inflation.

U.S. Durable Goods Orders rose by 0.7% in April, contrary to the expected 0.8% decline. The University of Michigan’s Consumer Sentiment Index increased to 69.1 in May, exceeding forecasts. One-year inflation expectations edged up to 3.3%, while five-year expectations dipped to 3.0%. These factors have strengthened the U.S. dollar, putting pressure on silver prices.

Looking ahead, U.S. banks close for Memorial Day, with key Fed speeches and first-quarter GDP data expected to influence the market. Positive GDP data may further strengthen the dollar, affecting silver prices.

Geopolitical Tensions & Silver Prices

On the geopolitical front, Gaza’s Ministry of Health reported Israeli airstrikes on a displaced people’s camp in Rafah, resulting in at least 35 Palestinian deaths and numerous injuries. Israel stated it targeted a Hamas compound, killing two senior members.

Sirens in Tel Aviv signalled rocket attacks claimed by Hamas, prompting ceasefire talks and hostage negotiations to resume on Tuesday. Meanwhile, diplomatic pressure on Israel mounts, especially after the International Court of Justice ordered a halt to its offensive in Gaza.

These geopolitical tensions between Israel and Hamas are boosting safe-haven demand for silver as investors seek refuge from market uncertainty.

Short-Term Forecast

Silver prices are expected to remain volatile amid geopolitical tensions and strong U.S. economic data. The price, trading around $30.80, shows potential for upward movement above $30.61, with resistance at $30.97.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver is trading at $30.80, reflecting a 1.56% increase. The pivot point at $30.61 is a crucial level for market direction. Immediate resistance levels are $30.97, $31.60, and $32.39, while support levels are $30.06, $29.44, and $28.79.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $30.37 and the 200-day EMA at $28.48, indicating a bullish trend. The price is currently above both key moving averages, suggesting continued upward momentum.

The outlook remains bullish above $30.61, but a break below this level could trigger a sharp selling trend.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.