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Silver Daily Price Analysis – XAG/USD Rally on Weak US Data, Retrace as Investors Take Profits

  • 3 mins read ●
  • Published:
silver market analysis 4

Silver opened at $31.215 today and retraced to $30.958, a 0.77% drop due to profit-taking after last week’s gains.

Key Points

  • Silver rose 2.70% on Friday, closing at $31.207 due to weaker US economic data.
  • Expectations of US rate cuts and potential Chinese stimulus support Silver prices.
  • Upcoming US inflation data and Fed Chair Powell’s testimony could impact Silver prices significantly.

Silver Daily Price Analysis – 08/07/2024

Silver gained the most on Friday after closing at $31.207, up +2.70% from an opening of $30.387. This was supported by weaker US economic data, which raised anticipation of a Federal Reserve interest rate cut next month. The unemployment rate jumped to a 2-1/2-year high of 4.1%, which added credence to signs the labor market is cooling and underpinned bullish sentiment for metals. Investors were heartened by the possibility of new economic stimulus measures in China to support its target for growth even more.

Silver has opened at $31.215 today and now sits at $30.958, a retracement by over 0.77%. In essence, this drop is just a technical correction from the previous rally, where traders are now making a profit after experiencing significant gains last week. Investors are hesitant to break that streak yet, and as such, we have very reserved market sentiment going into the key economic data releases later in the week, along with expected Federal Reserve commentary.

Rise in Silver prices are largely attributed to expectations of US Federal Reserve rate cuts and China seeking economic stimulus measures. Falling interest rates cut the cost of owning non-yielding assets like Silver, which tends to attract buying from investors. Moreover, the linking of the world’s largest solar farm in Xijiang reflects persistent need for Silver from the renewable energy sector which fuels prices higher.

Key Economic Data and News to Be Released Today

The release of the US inflation data and Fed Chair Jerome Powell’s semi-annual Congressional testimony this week will be carefully watched by investors. So, a softer inflation report and dovish comments from Powell could help further boost the price of Silver if it reinforces market expectations that rates are going to fall. Markets are also watching other Fed officials and collecting more data throughout the week to get a sense of where monetary policy is headed.

With the market pricing in a 78% chance of a rate cut in September, any deviations in economic data could lead to significant volatility in Silver prices. Moreover, China’s anticipated stimulus measures could provide additional support if implemented, aligning with the country’s goal to achieve 5% growth this year.

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Silver Technical Analysis – 08/07/2024

The 200-period EMA, currently around $30.756, acts as a dynamic support level and suggests a bullish trend in the larger time frame as the price remains above it.

silver m15 chart
XAG/USD – 15-minute Chart

In the short term, we might expect the price to hover around the 200 EMA and test the support at $30.459. If the price manages to hold above this level and gains bullish momentum, it might challenge the resistance levels at $30.536 and $30.624. Breaking above these could pave the way for a retest of the $31.459 high and potentially the $31.769 resistance.

Conversely, if the price breaks below the $30.459 support level, it might seek further support at $30.149 and $30.020. Given the neutral RSI, the market could experience consolidation before making a decisive move based on upcoming economic data and market sentiment.

Silver Fibonacci Key Price Levels 08/07/2024

Short-term traders planning to trade XAG/USD today should keep a close eye on the following key price levels for the day:

SupportResistance
30.45931.459
30.14931.770
29.64932.230

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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