Silver (XAG) Daily Forecast: Steady at $28.45, Will It Break $29?

By:

Arslan Ali

Published: May 10, 2024, 07:38 GMT+00:00

Key Points:

Weak US labor data boosts silver as Fed rate cut speculations increase, lifting prices.
Ongoing Middle East tensions elevate silver's safe-haven appeal amid geopolitical uncertainty.
Anticipation of US CPI and PPI reports heightens focus on potential Fed monetary adjustments.

In this article:

Silver

+0.70%

Market Overview

Silver prices (XAG/USD) continued to rise, reaching $28.57 with an intraday peak of $28.61, marking the third consecutive day of gains. The increase in silver prices is primarily due to disappointing labour data from the United States, which has softened expectations around Federal Reserve policy tightening. This development has contributed to a weaker dollar, subsequently lifting silver prices.

Additionally, the ongoing failure to reach a ceasefire in the Middle East has escalated geopolitical tensions, enhancing silver’s appeal as a safe-haven asset and further supporting its price increase.

Weak US Employment Data and Speculation of Fed Rate Cuts Drive Silver Prices Higher

The latest U.S. employment figures reveal a softening labor market, increasing the likelihood of interest rate cuts by the Federal Reserve, which boosts the appeal of non-yielding assets like silver.

According to the U.S. Bureau of Labor Statistics, initial jobless claims for the week ending May 3 rose to 231,000, surpassing both the anticipated 210,000 and the previous week’s figure of 209,000. This uptick suggests a potential slowdown in job market momentum, which may prompt the Fed to adjust its interest rate policy.

With anticipation building for next week’s Consumer Price Index (CPI) and Producer Price Index (PPI) releases, traders are keen to gauge further signals on the Fed’s next moves. The prospect of lower interest rates amid weakening employment conditions has heightened silver’s attractiveness as an investment, pushing prices upward.

Escalating Conflict in Gaza’s Rafah Boosts Safe-Haven Demand for Silver

The escalating conflict in Rafah, Gaza, has intensified safe-haven investments, notably in silver. Israeli forces and Hamas are locked in severe clashes, prompting mass evacuations and hospital clearances as Israel pushes deeper into the city.

According to the United Nations, the Israeli military’s control over Rafah’s border crossing has critically blocked humanitarian aid, exacerbating the already dire famine in the region. Reports indicate significant casualties, with at least 34,904 dead and over 78,514 injured in Gaza since the conflict escalated on October 7.

In a recent statement, President Joe Biden indicated that the U.S. would withhold weapons shipments to Israel should it escalate to a full-scale invasion of southern Gaza. This stance, according to Reuters, reflects growing international concern over the conflict’s spread. These tensions have significantly heightened the allure of silver as a safe-haven asset, with investors increasingly turning to the precious metal amid global uncertainty, thereby pushing its demand and price higher.

Silver (XAG/USD) Price Forecast

Silver Price Chart

In today’s trading, Silver is holding steady, with no significant change from its opening, marked at $28.45. The technical analysis highlights a pivotal point at $28.23, which is essential for determining the metal’s short-term direction. Resistance levels are set at $28.79, $29.24, and $29.64, indicating potential upside targets if upward momentum persists.

Conversely, support levels are identified at $27.91, $27.58, and $27.19, providing critical thresholds that could stabilize price drops. The 50-Day and 200-Day Exponential Moving Averages, at $27.38 and $26.81, respectively, suggest a bullish outlook unless prices dip below these averages, in which case a sharper decline may follow.

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.