Silver (XAG) Daily Forecast: Upward Trendline to Drive Buying Above $27

By:

Arslan Ali

Published: Apr 26, 2024, 07:40 GMT+00:00

Key Points:

Silver remains resilient: Despite mild bullish bias, sustained around $27.62 amid risk-off sentiment and weaker USD.
US economic indicators favor silver: Slower GDP growth, rising inflation bolster silver's hedge appeal.
Geopolitical tensions limit silver's upside: Middle East tensions mitigate safe-haven demand, capping silver's potential gains.

In this article:

Silver

+0.45%

Market Overview

Silver (XAG/USD) has managed to gain some positive traction and remained well bid around 27.6195, hitting the intra-day high of 27.6765. However, the mild bullish bias can be attributed to risk-off market sentiment, thanks to weaker US GDP print and a rise in US inflation, which put pressure on market sentiment as they signal potential economic challenges ahead.

Moreover, the decline in the US dollar, driven by the downbeat US economic data, was seen as another key factor that helped the silver price stay bid.

U.S. Economic Indicators and Silver Performance

On the US front, the GDP report showed a slowdown in growth and rising inflation, benefiting silver as a hedge. However, the bearish performance of the US dollar boosted silver’s gains amid expectations of Fed tightening. Investors expect the Fed to maintain higher interest rates due to persistent inflation, supporting US Treasury yields and the USD.

On the data front, US GDP growth for Q1 came in below expectations at 1.7%, down from the previous quarter’s 3.4%, indicating slower economic expansion. The GDP Price Index surged to 3.1%, signaling stubbornly high inflation, likely keeping the Federal Reserve cautious about lowering interest rates and making the USD more attractive to foreign investors. The probability of a rate cut in September stands at 58.2%.

Furthermore, Core Personal Consumption Expenditures rose more than anticipated, up 3.7% QoQ, reflecting increasing inflationary pressures. Positive figures also emerged in Initial Jobless Claims, dropping to 207K, and Pending Home Sales, up 3.4% MoM in March. Traders prefer to wait for more cues about the Federal Reserve’s (Fed) rate cut path before placing strong bets.

Impact of US Economic Factors on Silver Price

On the geopolitical front, easing concerns about a worsening of tensions in the Middle East weakens the safe-haven appeal of silver, likely limiting its potential for gains. This, combined with other factors, contributes to putting a cap on the upside for silver.

Recent military actions between Israel and Iran in the Middle East have made the region tense. Israel struck Iran’s consulate in Damascus, and Iran retaliated, but the attacks haven’t led to a big war yet. Both sides want to show their strength without starting a full-scale conflict, but they’re testing each other’s capabilities.

Therefore, the tense situation in the Middle East, marked by recent Israeli-Iranian military actions, has not significantly impacted the price of silver.

Silver (XAG/USD) Price Forecast

Silver – Chart

The daily technical outlook for Silver reveals a price of $27.55, marking a slight increase of 0.52%. Key price levels include a pivot point of $27.64, with immediate resistance noted at $28.79 and subsequent resistances at $29.57 and $30.33. Immediate support levels are observed at $26.52, followed by $25.68 and $24.72.

Technical indicators indicate a positive trend, with the 50-day Exponential Moving Average standing at $27.63 and the 200-day Exponential Moving Average at $26.54. The current upward trendline supports the potential for a bullish trend continuation. It’s crucial to monitor the $27.64 level, as a break below could signal a significant downward movement in prices.

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.