Silver (XAG/USD) Price Forecast Amid Dollar Strength and Market Uncertainty; What’s Next?

Silver prices are trending downward, anticipated to conclude the week at approximately $29.45 after hitting a low of $29.38.

Arslan Butt•Friday, July 19, 2024•1 min read

Silver prices are trending downward, anticipated to conclude the week at approximately $29.45 after hitting a low of $29.38.

Silver Price Chart - Source: Tradingview — Silver Price Chart – Source: Tradingview

This decline correlates strongly with the robust performance of the US dollar, which has surged despite anticipation of a Federal Reserve rate cut in September.

Dollar Dynamics and Labor Market Data Influence Silver Prices

While the dollar’s strength poses challenges, the silver market is also digesting significant economic indicators. Recent reports from the Bureau of Labor Statistics indicate a spike in unemployment claims to 243,000—the highest four-week average seen in over two and a half years. This data, combined with subdued inflation rates, supports the likelihood of forthcoming Federal Reserve rate cuts. Despite a tough dollar market, these factors hint at potential near-term relief for silver prices.

Geopolitical Tensions Could Propel Safe-Haven Demand

Amidst global instability, comments from former President Donald Trump about defense payments from Taiwan introduce further uncertainty, potentially enhancing silver’s appeal as a safe-haven asset. Additionally, escalating conflicts in the Middle East, particularly the intensified military actions in Gaza resulting in significant humanitarian distress, underscore the geopolitical risks that could divert investment towards safe havens like silver.

Technical Outlook for Silver

In technical terms, silver (XAG/USD) is currently positioned between critical moving averages, suggesting a potential consolidation phase. The immediate technical resistance lies at $30.48, with further resistance anticipated at $30.79, $31.12, and $31.43. Should silver break above these levels, it could trigger a more substantial rally.

Conversely, should prices fall below the current support at $30.06, silver could face downward pressures towards $29.70 and $29.34. This technical setup offers traders a clear framework for navigating the silver markets under the current economic and geopolitical climate.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.