Key Points:
- XAG/USD Silver Forecast drifted lower after Monday’s surprise rally on a low-volume trading day.
- Inflation data and potential Fed rate cuts are crucial for Silver’s direction.
- Industrial demand and a strong dollar influence silver market sentiment.
Key Drivers and Market Sentiment
Industrial demand and the same macroeconomic variables affecting gold prices have recently impacted silver prices. Investors are watching inflation data from the United States for signs that the Federal Reserve may lower interest rates. The continued correction in silver prices is greatly endangered by the strong dollar, which may be supported by a change in U.S. monetary policy toward rate hikes.
Inflation Data and Federal Reserve Policy
The preferred inflation indicator of the Federal Reserve, the core Personal Consumption Expenditures (PCE) price index, is due on Friday. Preliminary estimates for PCE data point to improvement over the first quarter, with core inflation expected to be 0.2%, down from 0.3% in March. Inflationary pressures may be softened if consumer spending moderates as projected.
Officials at the Federal Reserve are considering additional rate hikes if inflation stays high, according to the minutes of the most recent policy meeting. There was discussion in the minutes over whether or not the present interest rate levels are restrictive enough to control inflation. Some authorities are open to rate decreases later this year, depending on economic conditions.
Market Forecast
Spot XAG/USD Silver Forecast prices are expected to rise marginally shortly. Industrial demand and the larger economic framework lend credence to an optimistic outlook, even though a strong dollar could put downward pressure. Important U.S. inflation data will not be disclosed until the Federal Reserve knows the future of silver prices. Depending on these economic variables, market mood changes, so traders should be ready for volatility.
Technical Analysis
Silver’s recent stellar performance has placed it in a position to test the 11-year high of $32.52, achieved on May 20. Since the next significant target is $34.35, this level might be the catalyst for a rapid acceleration to the upside.
Thirty dollars is the new near-term low. The 50-day moving average, at $27.76, is the next significant target after this, which might accelerate the fall. This indicator regulates the intermediate trend.
