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Silver Daily Price Analysis – XAG/USD Declines on Fed’s Rate Projections Despite Geopolitical Uncertainty

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silver market analysis 1

The Federal Reserve’s projection of just one rate cut in 2024 has strengthened the dollar and overshadowed softer inflation data, impacting silver prices.

Key Points

  • Silver closed up 3.54% yesterday at $30.265 due to geopolitical tensions.
  • Today’s bearish trend saw silver fall 2.78% to $29.425 due to a stronger US dollar.
  • U.S. PPI figures today may further influence silver prices by affecting the dollar.

Silver Daily Price Analysis – 13/06/2024

Silver prices showed notable volatility yesterday, closing at $30.265 after opening at $29.290, reflecting a significant gain of 3.54%. This upward movement was primarily influenced by geopolitical tensions in the Middle East and Europe, which bolstered demand for safe-haven assets like silver. However, the gains were somewhat limited by the Federal Reserve’s unexpected hawkish stance, which indicated only one rate cut in 2024, strengthening the US dollar and exerting downward pressure on silver prices.

Today, silver opened at $29.735 and has currently dipped to $29.425, marking a 2.78% decline so far. The bearish trend can be attributed to continued strength in the US dollar, which makes dollar-denominated commodities like silver more expensive for holders of other currencies. Additionally, the market’s reaction to the Fed’s stance on fewer rate cuts continues to weigh heavily on silver​.

The Federal Reserve’s hawkish surprise remains a key factor. Their projection of just one rate cut in 2024 contrasts sharply with earlier expectations of three cuts, leading to a stronger dollar. This hawkish outlook has overshadowed softer consumer inflation figures, which showed that the annual core CPI rose by 0.2% in May, indicating some easing in inflation pressures but not enough to change the Fed’s course significantly.

Tensions in the Middle East and political uncertainties in Europe, such as French President Emmanuel Macron’s decision to call snap elections, have provided some support to silver prices by increasing its appeal as a safe-haven asset. These geopolitical factors are likely to continue influencing silver prices in the short term, limiting deeper losses despite the strong dollar​.

Key Economic Data and News to Be Released Today

Today’s high-impact economic data includes the release of U.S. Producer Price Index (PPI) figures. Should these numbers come in higher than expected, they could reinforce the Federal Reserve’s hawkish stance, further strengthening the dollar and potentially pushing silver prices lower. Conversely, any signs of easing inflationary pressures could provide some relief to silver prices by weakening the dollar​.

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Silver Technical Analysis – 13/06/2024

Silver couldn’t sustain the bullish breakout from yesterday in today’s trading session. The asset is currently bearish, trending below the intraday 200 EMA. However, the RSI seems reluctant to offer a SELL confirmation for traders yet.

silver m15 chart
XAG/USD – 15-minute chart

It is advisable for short-term traders to wait for the RSI line to cross below the 50 level before considering shorting the asset today.

Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

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