Silver (XAG) Daily Forecast: Supported Over $29.25; Buy Now?

Traders are expected to remain cautious ahead of Fed Chair Jerome Powell’s speech on Tuesday and the release of the FOMC meeting minutes on Wednesday. The US Nonfarm Payrolls (NFP) report, scheduled for Friday, will also play a crucial role in shaping market sentiment and expectations regarding future Fed policy decisions.

Impact of Economic Data and Fed Expectations on Silver Prices

Despite rising expectations of a September rate cut by the Federal Reserve, the US dollar continues to gain momentum as traders await clearer signals on the Fed’s monetary policy stance. However, these gains in the dollar might be short-lived given the increasing consensus that the Fed will initiate rate cuts starting in September.

The latest surge in expectations came after Monday’s release of the US ISM PMI data, revealing that the manufacturing sector contracted for the third consecutive month in June, with factory input prices dropping to a six-month low.

The Institute for Supply Management reported its Manufacturing PMI remained in contraction for a second consecutive month, slipping from 48.7 to 48.5 in June, below expectations. The Employment Index also declined to 49.3 from May’s 51.1, indicating a slowdown in hiring within the sector. Additionally, the Prices Paid Index, a measure of inflation, dropped to 52.1 from 57, reflecting easing price pressures.

These figures follow the US PCE Price Index report, which revealed May’s inflation rate hit its lowest in over three years, reinforcing expectations for potential Fed interest rate cuts.

The US dollar’s temporary strength amid Fed rate cut expectations could restrain silver prices. Meanwhile, weak manufacturing data and easing inflation pressures may heighten expectations of Fed easing, supporting silver as a safe-haven asset.

Short-term Forecast

Silver prices (XAG/USD) declined to $29.41, with an intraday low of $29.26. This drop is due to a strong US dollar, despite Fed rate cut expectations.