Silver price (XAG/USD) continued its downward trend, remaining under pressure around $28.95 and hitting an intra-day low of $28.71. This decline was driven by several factors, including a strong US dollar and a risk-on market sentiment.
The US dollar gained strength due to hawkish comments from Federal Reserve officials, indicating that the central bank is unlikely to start its rate-cutting cycle soon amid a resilient US economy.
Conversely, the potential escalation of geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict helped limit silver’s losses.
Looking ahead, traders are closely watching two key US economic releases: the final Q1 GDP print on Thursday and the Personal Consumption Expenditures (PCE) Price Index report on Friday.
Fed’s Hawkish Stance and its Impact on Silver Prices
The US dollar continued its upward trend after hawkish comments from Federal Reserve officials. They indicated that the Fed is unlikely to cut interest rates soon due to a strong US economy. This stance supported a rise in US Treasury bond yields, benefiting the USD and putting pressure on silver prices.
Fed Governor Michelle Bowman emphasized readiness to raise borrowing costs if inflation doesn’t ease, stating it’s not yet time to consider rate cuts. Meanwhile, Fed Governor Lael Brainard suggested future rate cuts might be warranted depending on inflation expectations, indicating a cautious approach to monetary policy.
Hawkish comments from Fed officials, highlighting a delay in rate cuts due to a strong US economy, contributed to higher US Treasury yields and a stronger US dollar. This pressure on silver prices, which often move inversely to the dollar and are sensitive to interest rate expectations.
Geopolitical Tensions Support Silver Prices Amid Market Uncertainty
Russia’s Foreign Ministry summoned US Ambassador Lynne Tracy, accusing the US of involvement in a violent incident in Crimea and warning of impending retaliatory actions. This escalation increases tensions between the two nations.
Meanwhile, concerns persist over potential conflict between Israel and Lebanon due to rising provocations by Hezbollah, maintaining anxiety and supporting safe-haven assets like precious metals. These geopolitical developments highlight ongoing instability, influencing market sentiment.
The geopolitical tensions, including accusations between Russia and the US over Crimea and heightened risks of conflict in Israel and Lebanon, have boosted demand for safe-haven assets like silver, supporting prices amidst market uncertainty.
Short-term Forecast
Silver (XAG/USD) remains under pressure around $28.95, with key support at $28.71. Traders should monitor the final Q1 GDP and PCE Price Index releases for further direction.
Silver (XAG/USD) Price Forecast: Technical Outlook
Silver – ChartOn the 4-hour chart, Silver (XAG/USD) remains under pressure, trading at $28.95. The pivot point is set at $28.71, indicating a critical level for market direction. Immediate resistance is seen at $29.26, with subsequent resistance levels at $29.70 and $30.17.
On the downside, immediate support is at $28.32, followed by $27.99 and $27.62. The 50-day EMA stands at $29.59, while the 200-day EMA is at $29.51.
The chart also shows a double bottom pattern, suggesting a potential buying trend. However, silver remains bullish above $28.71, and a break below this level could trigger a sharp selling trend.
This article was originally posted on FX Empire
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