Silver (XAG) Daily Forecast: Price Nears $29 as Fed Signals Rate Cut

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Published: Aug 1, 2024, 07:23 GMT+00:00

Key Points:

Silver prices fall to $28.97 due to a risk-on market sentiment.
Fed's dovish stance weakens the dollar, limiting further silver price declines.
Middle East tensions boost silver's safe-haven appeal, supporting its current price levels.

Silver (XAG) Daily Forecast: Price Nears $29 as Fed Signals Rate Cut

Market Overview

Despite several supportive factors, silver prices (XAG/USD) have struggled to sustain upward momentum, falling to around $28.97, with an intra-day low of $28.79. This decline is primarily due to a risk-on market sentiment, which diminishes the appeal of safe-haven assets like silver.

However, the Federal Reserve’s dovish stance has weakened the US dollar, potentially limiting further losses for silver.

Additionally, ongoing geopolitical tensions in the Middle East, triggered by the recent assassination of a Hamas leader, have contributed to maintaining silver’s value as a safe haven.

Anticipated Rate Cuts and Weak Job Growth Support Silver Prices

Despite recent declines, silver prices are expected to rise in the near term as market participants anticipate Federal Reserve interest rate cuts. The Fed’s relaxed approach has lowered US Treasury yields and weakened the US dollar, generally supporting silver prices.

While the Fed maintained its interest rate at 5.25%-5.50%, citing progress in controlling inflation and a cooling labor market, expectations of future rate cuts keep the silver outlook positive.

Fed Chair Jerome Powell indicated the possibility of interest rate cuts in September if inflation remains stable. A recent ADP report showed slower job growth and wage increases, reinforcing the argument for a rate cut.

The report highlighted a 122,000 increase in US private sector jobs for July, below the expected 150,000, with annual pay rising by 4.8%. This weaker job growth pressures the Fed to consider rate cuts, which could further support silver prices as lower interest rates generally favor precious metals.

Geopolitical Tensions and Safe-Haven Demand Boost Silver Prices

Rising geopolitical tensions are making silver an attractive safe-haven investment. Recent events, including the assassination of a Hamas leader and escalating Middle Eastern conflicts, have increased investor fears and demand for silver.

The funeral led by Iran’s Supreme Leader and the UN Security Council’s emergency meeting have added to market volatility. The ongoing conflict and significant casualties drive investors to seek the stability of silver.

Thus, geopolitical tensions support silver prices by enhancing its appeal as a safe-haven asset, limiting price losses, and pushing it to a two-week high.

Short-Term Forecast

Silver prices are poised to rise due to anticipated Fed rate cuts and geopolitical tensions, maintaining support above $28.79. A break below this level may trigger a sharp decline.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is currently priced at $28.97, down 0.28%. On the 4-hour chart, the pivot point is at $28.79, a crucial level to watch. Immediate resistance is at $29.45, followed by $30.08 and $30.58.

On the downside, immediate support is at $28.25, with further support at $27.78 and $27.30. The 50-day EMA is at $28.68, indicating a bullish trend, while the 200-day EMA stands at $29.42.

Silver remains bullish above the pivot point of $28.79. However, 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.