Silver (XAG) Daily Forecast: Price Climbs Above $27; Bullish Momentum Building?

By:

Arslan Ali

Updated: Aug 6, 2024, 07:39 GMT+00:00

Key Points:

Silver prices remain under pressure due to a strong US dollar and rising Treasury yields.
Despite weak economic data, the US dollar strengthens, limiting silver's potential gains.
Middle East tensions support silver prices, offering a safe haven amid geopolitical conflicts.

In this article:

Silver

-1.54%

Market Overview

Silver prices (XAG/USD) continue to face downward pressure, trading at $27.21 and reaching an intra-day low of $26.91. This decline is driven by a strengthening US dollar, bolstered by rising Treasury bond yields. Improved global risk sentiment, reflected in a rally in equity markets, has also diminished silver’s appeal as a safe-haven asset.

However, expectations of a 50-basis-point Federal Reserve rate cut in September and ongoing geopolitical tensions are providing some support, helping to limit silver’s losses.

US Dollar Rises Despite Weak Economic Data and Geopolitical Tensions

Despite expectations for significant Federal Reserve interest rate cuts, the US Dollar (USD) has strengthened due to rising Treasury bond yields, which also constrain silver’s potential gains. Recent data showing weaker manufacturing and job growth have raised recession concerns, driving Treasury yields to their lowest levels since mid-2023.

Traders anticipate a 50-basis-point Fed rate cut in September. However, San Francisco Fed President Mary Daly stated that the job market slowdown is not alarming, emphasizing the Fed will balance employment and price stability.

The mixed data have pressured silver prices, as a stronger USD and rising yields limit gains despite expected Fed rate cuts.

Geopolitical Tensions in the Middle East Drive Safe-Haven Demand for Silver

On the geopolitical front, the ongoing Middle Eastern conflicts are likely to support silver prices as a safe haven. Meanwhile, the tensions have escalated with Iran, Hamas, and Hezbollah vowing retaliation against Israel after the assassination of Hamas leader Ismail Haniyeh in Tehran.

Recent violence has resulted in at least 40 deaths and 71 injuries in Gaza from Israeli attacks, while child malnutrition in the Gaza Strip has surged nearly 50% from June to July. The UN has called for urgent de-escalation to prevent further conflict.

Moreover, almost 90 unidentified Palestinian bodies, previously held by Israeli forces, have been returned to Gaza for burial. The ongoing war has resulted in significant casualties, with at least 39,623 people killed and 91,469 wounded in Gaza.

Short-Term Forecast

Silver is expected to remain under pressure, trading at $27.21 as a strong US dollar and rising Treasury yields constrain potential gains. However, anticipated Federal Reserve rate cuts of 50 basis points and geopolitical tensions may provide some support.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $27.21, down 0.15%, indicating bearish momentum. The 4-hour chart shows the price is below the pivot point of $27.56, maintaining downward pressure. Immediate resistance is seen at $28.08, with further levels at $28.60 and $29.15.

On the downside, support is found at $26.82, followed by $26.49 and $26.15. The 50-day EMA at $28.02 and the 200-day EMA at $28.80 reflect a bearish outlook.

A break above $27.56 could signal a bullish reversal, but until then, the market remains under pressure from strong resistance levels.

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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