Silver (XAG) Daily Forecast: Hits $29.50; Will Upward Trendline Spark Buying?

Despite the bearish trend in the US dollar, the price of Silver (XAG/USD) continued its decline, hovering around $29.49 and hitting an intraday low of $29.25. This downward trend was largely influenced by the market’s risk-on sentiment, which typically diminishes demand for safe-haven assets like Silver.

Conversely, the US dollar’s weakening momentum, fueled by the Federal Reserve’s indecisive stance on interest rate adjustments, played a crucial role in preventing further significant losses for Silver prices.

Weakening US Dollar and Fed Rate Expectations on Silver Prices

Despite a stronger-than-expected US Purchasing Managers Index (PMI), the US dollar has continued to lose traction and remains under pressure. This prompted Federal Reserve officials to delay the timing of the first interest rate cut this year. According to the CME FedWatch Tool, traders now see a 66% probability of a Fed rate cut in September, up from 59.5% last week.

The final reading of the US headline and Core Personal Consumption Expenditures (PCE) Price Index is expected to show a 2.6% year-on-year increase in May. The weakening US dollar and heightened expectations of a Federal Reserve rate cut are poised to bolster silver prices.

Investors will closely monitor speeches from Federal Reserve members Lisa Cook and Michelle Bowman on Tuesday. Key US economic data releases this week include the final reading of first-quarter Gross Domestic Product (GDP) on Thursday and the May Personal Consumption Expenditure (PCE) Price Index report on Friday.

Geopolitical Tensions Boost Safe-Haven Demand for Silver

Safe-haven demand for silver may strengthen due to geopolitical tensions in the Middle East and Ukraine. Israeli Prime Minister Benjamin Netanyahu stated that the most intense phase of the assault on Hamas in Gaza is nearing its conclusion but emphasized that the broader conflict continues.

Meanwhile, Russia criticized the United States for a missile attack in Crimea, which killed at least four people, including children, and injured 151 others. Russia’s Foreign Ministry summoned US Ambassador Lynne Tracy, accusing the US of initiating a “proxy war.”

These geopolitical tensions in the Middle East and Ukraine increase demand for safe-haven assets like silver, pushing prices higher amid global uncertainty and conflict-related concerns.

Short-term Forecast

Despite a weakening US dollar, Silver (XAG/USD) declined to $29.51, influenced by market risk-on sentiment. The $29.36 pivot point is crucial for potential bullish momentum or further selling pressure.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is currently trading at $29.49, down 0.10%. The 4-hour chart reveals that the pivot point is set at $29.36, a critical level to monitor. Immediate resistance is found at $29.75, followed by $30.02 and $30.32, indicating potential upward targets if the price breaks through the pivot point.

On the downside, immediate support is at $29.14, with further support at $28.88 and $28.66. The 50-day Exponential Moving Average (EMA) stands at $29.74, while the 200-day EMA is at $29.54. These indicators suggest a cautious outlook, with the upward trendline providing support around the pivot point level of $29.36.

An increase in selling pressure at this level could trigger a sell-off, while a break above the resistance could signal bullish momentum. Overall, maintaining a position above $29.36 is crucial for a bullish outlook. A break below this level could drive a sharp selling trend.