Silver (XAG) Daily Forecast: Struggles at $27.60 – Breakout or Further Decline Ahead?

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Published: Aug 9, 2024, 07:06 GMT+00:00

Key Points:

Silver dropped to $27.60 after strong US jobs data reduced safe-haven demand.
Fed rate cut speculation and weaker dollar could support silver's potential rebound.
Middle East tensions are helping silver limit losses amid rising geopolitical risks.

Silver (XAG) Daily Forecast: Struggles at $27.60 – Breakout or Further Decline Ahead?

Market Overview

Silver prices (XAG/USD) have struggled to maintain upward momentum, dropping to around $27.60 with an intra-day low of $27.41. This bearish trend follows a stronger-than-expected US labor market report on Thursday, which eased recession fears and boosted investor confidence, reducing demand for safe-haven assets like silver.

Despite the decline, silver may rebound as expectations grow that the Federal Reserve could cut interest rates as early as September. Additionally, dovish Fed expectations are pressuring US Treasury yields, keeping the dollar subdued, which could support silver prices. Escalating geopolitical tensions in the Middle East also help limit silver’s losses.

Silver Gains as US Jobs Data and Fed Rate Cut Speculation Boost Appeal

The robust US labor market report released Thursday eased recession fears and boosted investor confidence, reducing silver’s appeal as a safe-haven asset. This fueled a rally in US equity markets, capping silver’s gains.

However, markets have already priced in a 25-basis point rate cut by the Federal Reserve in September, with speculation of a 50-basis point cut also providing support for silver prices.

The Fed’s dovish stance has lowered US Treasury bond yields and weakened the US dollar, further supporting XAG/USD. The report showed 233,000 initial jobless claims, beating expectations and offering additional support for silver.

Middle East Tensions Drive Demand for Safe-Haven Silver Amid Rising Risks

Escalating tensions in the Middle East are helping silver prices limit deeper losses. The recent assassination of Hamas leader Ismail Haniyeh in Tehran has increased the risk of retaliatory strikes by Iran on Israel, boosting demand for safe-haven assets like silver (XAG/USD).

Meanwhile, Israel’s military actions in Gaza, including strikes on schools and a refugee camp, have caused significant casualties.

Despite invitations for ceasefire talks on August 15 from the US, Egypt, and Qatar, Israel has agreed to participate, while Hamas has yet to respond. The ongoing conflict continues to support silver prices amid market uncertainty.

Short-Term Forecast

Silver (XAG/USD) is currently at $27.60, with potential bullish momentum above $27.27. A break above $27.70 could sustain the uptrend, while falling below $27.27 may lead to sharp declines.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is trading at $27.60, up 0.27% on the day. The 4-hour chart shows the price holding above the pivot point at $27.27, indicating potential bullish momentum. Immediate resistance is at $27.96, with further resistance at $28.60 and $29.15.

On the downside, support is found at $26.45, followed by $25.95 and $25.38. The 50-day EMA at $27.70 is key, as a break above it could sustain the upward trend, while the 200-day EMA at $28.86 serves as a critical barrier. A break below $27.27 could trigger a sharp selling trend, reversing the current outlook.

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.