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Silver Price Forecast: XAG/USD Peaks at $29.020 Amid Fed Uncertainty and Middle East Tensions

Silver prices (XAG/USD) continued their moderate uptrend, reaching an intraday peak of approximately $29.020. This rise is largely due to a growing preference for precious metals such as silver as a haven amid global uncertainties.

Silver Price Chart - Source: Tradingview

During periods of economic or geopolitical turmoil, investors frequently seek out silver, bolstering its market value.

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Moreover, ongoing ambiguity regarding the Federal Reserve’s schedule for interest rate reductions has kept markets in a state of anticipation. This uncertainty fosters a mix of caution and optimism in silver price forecasts.

Influence of Escalating Middle East Tensions on Silver Prices (XAG/USD)

Although silver has shown a gently bullish trend, its trajectory is complicated by uncertainties from the Middle East crisis. Recent aggressive actions by Iran, including drone and missile attacks on Israel, have exacerbated regional tensions.

Conversely, signs that Iran may seek to de-escalate the situation could improve market sentiment, potentially dampening the appeal of silver as a haven as investors might pivot towards riskier assets.

Federal Reserve Speculations and Their Effects on Silver Prices (XAG/USD)

In the U.S., speculations about the Federal Reserve’s interest rate policy are shaping the silver market. Market expectations have shifted, with many now predicting that interest rate cuts might be postponed until September instead of June, due to persistent inflation and a robust U.S. economy.

The prospect of enduring higher interest rates could enhance the U.S. dollar’s strength, making silver, which is priced in dollars, more expensive for holders of other currencies and potentially capping gains in silver prices.

Impact of Strong U.S. Retail Sales on Silver Prices (XAG/USD)

Additionally, recent U.S. Retail Sales data for March, which showed a 0.7% month-on-month increase, beating the expected 0.3% rise and outpacing the previously revised gain of 0.9%, indicates strong consumer spending.

This could further support ongoing inflation, contributing to a stronger dollar and exerting downward pressure on silver prices as a stronger dollar typically reduces demand for dollar-denominated commodities like silver.

Silver Price Forecast: Technical Outlook

On April 16, Silver’s technical analysis indicates a pivot point at $27.58. Should the price maintain above this level, it could indicate a bullish trend with potential resistance points at $29.05, followed by $29.80, and $30.68. However, a breach below the pivot could lead to a sharp sell-off, testing immediate support levels at $26.54, $25.74, and eventually $25.00.

The Relative Strength Index (RSI) is currently at 45, suggesting that Silver is neither overbought nor oversold at this juncture. The 50-day Exponential Moving Average (EMA) stands at $27.85, reinforcing the significance of the pivot point.

Silver Price Chart - Source: Tradingview

If Silver stays above the EMA and pivot point, the outlook remains positive, but breaking below these levels could accelerate the downward momentum.

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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.
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