Silver (XAG) Daily Forecast: Prices Nears $28; Triangle in Play

By:

Arslan Ali

Published: Jul 30, 2024, 07:08 GMT+00:00

Key Points:

Silver prices steady at $27.92, driven by expected Fed rate cut in September.
Geopolitical tensions in the Middle East increase demand for safe-haven assets like silver.
Traders await policy decisions from FOMC, Bank of Japan, and Bank of England this week.

In this article:

Silver

-1.25%

Market Overview

Silver prices (XAG/USD) remained steady around the $27.92 level, reaching an intraday high of $27.98. This upward trend is driven by several factors, including expectations of a Federal Reserve rate cut in September, which has pressured the US dollar, benefiting silver as a non-yielding asset.

Additionally, risk-off sentiment and rising geopolitical tensions, particularly from conflicts in the Middle East, have increased demand for this precious metal.

Traders remain cautious ahead of major central bank meetings. The Federal Open Market Committee (FOMC), Bank of Japan, and Bank of England are set to announce their policy decisions this week.

Key macro data, including US Nonfarm Payrolls, Chinese PMIs, and Eurozone inflation figures, will also influence USD and XAG/USD trends.

Easing Inflation and Weaker USD Drive Silver Prices Higher

The broad-based US dollar is losing ground as market participants expect the Federal Reserve to cut rates in September. This anticipation has weakened the USD and supported higher silver prices.

Recent data showing easing inflation pressures, including a 0.1% rise in the Personal Consumption Expenditures (PCE) Price Index for June and a 0.2% increase in the core PCE Price Index, has reinforced expectations of an upcoming Fed policy easing cycle.

Consequently, subdued US Treasury bond yields have further boosted silver prices, as the opportunity cost of holding non-yielding assets like silver decreases.

Geopolitical Tensions Boost Silver Prices Amid Middle East Conflicts

Rising geopolitical tensions, especially ongoing conflicts in the Middle East, are driving silver prices higher as investors seek safe-haven assets. Recent clashes involving Israel and Hezbollah, along with the humanitarian crisis in Gaza, have increased market instability.

The call for a ceasefire amid fears of a polio outbreak and continued violence has further intensified demand for silver as a hedge against uncertainty.

Consequently, escalating geopolitical risks and the search for stability have led to increased buying of silver, pushing its prices higher amid growing global uncertainties.

Short-Term Forecast

Silver (XAG/USD) is expected to stay above $27.42 support, with resistance at $28.57. The bearish outlook persists below $28.19 due to the descending triangle formation.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $27.92 on the 4-hour chart, up 0.18%. The pivot point is $28.19, which is crucial for market direction. Immediate resistance is at $28.57, with further resistance at $28.96 and $29.46. Immediate support is found at $27.42, followed by $26.96 and $26.54.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $28.70 and the 200-day EMA at $29.53. Silver has formed a descending triangle, extending resistance near the $28.20 mark.

The outlook is bearish below $28.19. A break above this level could shift sentiment to bullish while staying below suggests continued bearish pressure.

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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