Silver Price Forecast: Rally to $26.46 Amid Middle East Tensions and Fed’s Hawkish Stance

Amid heightened geopolitical tensions in the Middle East and a bullish U.S. dollar, silver prices demonstrated resilience, reversing

Arslan Butt•Wednesday, May 1, 2024•2 min read

Silver Price Chart - Source: Tradingview

Amid heightened geopolitical tensions in the Middle East and a bullish U.S. dollar, silver prices demonstrated resilience, reversing minor losses to rally to $26.4605 from $26.3965. Such movements often reflect silver’s role as a traditional safe-haven asset during turbulent times.

Additionally, ongoing large-scale gold acquisitions by China since October 2022—its longest buying spree in over two decades—have indirectly bolstered silver prices, due to the historical correlation between the two metals.

Monitoring Economic Indicators Impacting Silver

Investors remain cautious as they await the outcome of the Federal Reserve’s forthcoming monetary policy meeting. Key U.S. economic indicators, including the ISM Manufacturing PMI and ADP Employment Change, are under scrutiny, potentially impacting market sentiment and precious metal prices.

Federal Reserve’s Influence on Metal Prices

The U.S. dollar has surged to a six-month peak of 106.40, driven by the Federal Reserve’s persistent hawkish stance, which suggests interest rates may remain elevated. This development could limit upward movement in metal prices as higher interest rates increase the opportunity cost of holding non-yielding assets like silver and gold.

Market participants are keenly anticipating the press conference following the Fed’s meeting for further direction.

Geopolitical Developments and Silver’s Safe-Haven Appeal

In the geopolitical arena, escalating tensions following Israeli Prime Minister Benjamin Netanyahu’s announcement of military plans in Gaza highlight the ongoing unrest.

Such developments tend to drive investors towards safe-haven assets like silver, potentially increasing demand and pushing prices upward.

Silver’s Current Technical Position

Silver currently trades at $26.4415, showing a 0.60% increase and maintaining a position above the key pivot point of $26.27, suggesting a potential bullish bias.

Resistance levels lie at $26.95, $27.76, and $28.79, while support can be found at $25.76, $25.23, and $24.76. A bullish engulfing candle formation near the $26.45 support area further indicates potential for upward movement, reinforcing silver’s bullish market sentiment.

Silver Price Chart - Source: Tradingview

However, a fall below the $26.27 pivot could shift the outlook to bearish, underscoring the critical nature of this threshold in the current market climate.

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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.