Silver (XAG/USD) Trends Lower Amid Geopolitical Easing and U.S. Economic Outlook

Silver prices commenced the trading week on a decline, dropping to an intraday low of $27.78 per ounce. The decline in silver can primarily be attributed to a de-escalation in the Middle East, specifically between Iran and Israel, which has lessened the demand for silver as a safe-haven asset.

Additionally, the persistence of high U.S. interest rates is contributing to the strengthening of the U.S. dollar, placing further pressure on silver prices.

Geopolitical Calm Reduces Safe-Haven Demand

The recent geopolitical developments between Iran and Israel have injected a sense of relief into the market. Iran’s restrained response to an Israeli missile strike suggests a lower likelihood of immediate conflict escalation, reducing the urgency among investors to flock to safe-haven assets like silver.

This has directly impacted the metal’s pricing, causing a notable dip as investor sentiment shifts towards riskier assets.

U.S. Economic Policy Influences

The silver market is also feeling the effects of U.S. monetary policy. Expectations for rate cuts have been pared back, with the market now eyeing September for potential adjustments by the Federal Reserve.

This sentiment is reinforced by comments from Chicago Fed President Austan Goolsbee, who advocates for a cautious approach until there is clearer evidence of inflation trends. The rising yields on U.S.

Treasury bonds, a reflection of enduring inflation concerns and a robust U.S. dollar, are exerting additional downward pressure on silver prices.

Economic Indicators to Watch

Traders are keenly awaiting the release of key economic indicators this week, including global PMI figures, the U.S. Q1 GDP advance report, and the Personal Consumption Expenditures (PCE) Price Index.

These data will provide further insights into economic health and could influence silver’s trajectory depending on its implications for monetary policy and economic activity.

Technical Outlook for Silver

As of now, SILVER is trading at $28 per ounce, a decrease of 2.68%. This places it below the crucial pivot point of $28.05, suggesting potential for further declines. Key resistance levels at $29.57, $30.51, and $31.48 remain formidable barriers that could cap gains unless bullish momentum resumes.

Immediate support is found at $27.32, with additional safety nets at $26.52 and $25.68, which may stabilize prices if bearish trends persist. The technical indicators present a mixed but primarily bearish outlook.

The 50-day EMA at $28.15 slightly above the current price and the 200-day EMA at $26.32 suggest a potential for near-term stability or even a reversal if the price can reclaim levels above the immediate pivot point.

However, the market’s sentiment will largely be dictated by upcoming economic releases and any new geopolitical developments.

Conclusion

The current market conditions for silver are influenced by a combination of easing geopolitical tensions and anticipations regarding U.S. interest rates.

While the near-term outlook remains bearish beneath the pivot of $28.05, significant upcoming economic data could catalyze shifts in market sentiment and price dynamics for silver.