Silver Price Climbs Amid Fed Rate Cut Anticipation and Political Uncertainty
Silver's market value experienced a notable rise, touching $30.87 amidst a buoyant trading environment and a strengthening U.S. Dollar.
Silver’s market value experienced a notable rise, touching $30.87 amidst a buoyant trading environment and a strengthening U.S. Dollar. This uptrend in Silver (XAG/USD), reaching a daily high of $30.88, largely stems from the market’s increasing belief that the Federal Reserve will reduce interest rates starting in September.
This sentiment was reinforced by Fed Chair Jerome Powell’s recent affirmations, which have sustained lower U.S. Treasury yields, heightening Silver’s appeal as it offers no interest yield, making it a more attractive option in a low-rate landscape.
Influence of Political Events on Market Sentiment
The unsuccessful attempt on Donald Trump’s life has paradoxically bolstered his 2024 presidential campaign, igniting expectations of diminished regulatory constraints under his potential administration.
This prospect has prompted investors to lean towards riskier assets, potentially dampening the momentum for traditionally safe assets like Silver. Moreover, the U.S. Dollar’s rise, propelled by the anticipation of Trump’s policies inflating government debt and spurring inflation, has generally restricted the gains in Silver prices.
Economic Indicators and Their Impact on Silver
Recent data highlighted a reduction in U.S. consumer prices last month, marking the first decline in over four years, with annual inflation cooling to 3% from 3.3% in May.
Powell hinted that rate cuts could commence before inflation fully reverts to the 2% target, aiming to stimulate economic activity by lowering borrowing costs. While a robust U.S. Dollar could temper Silver’s advancements, prospective rate reductions may bolster its status as a hedge against inflation and economic fluctuations.
RATE CUT COMING? WHAT DOES THAT MEAN FOR CRYPTO?
Fed Chair Powell hinted at potential rate cuts, possibly as soon as September.
If rates are cut, it could lower borrowing costs and increase liquidity, benefiting high-risk investments like crypto.
Historically, rate cuts have… pic.twitter.com/yfHLAbOZHf
— Mario Nawfal’s Roundtable (@RoundtableSpace) July 9, 2024
Global Market Dynamics and Silver
Globally, market sentiment is positive, fueled by rate cut prospects and optimism over Trump’s potential re-election. This upbeat outlook has propelled Asian equities, such as Japan’s Nikkei 225 and South Korea’s KOSPI, to significant gains.
#Fairdesk
CPI is significant for crypto because it signals inflation trends, which can sway market sentiment, affect monetary policies, and trigger regulatory responses, all influencing cryptocurrency values and investor behavior globally.@THARINDUkz11 @kasun855— Lahiru MD (@Lahirumadhu11) July 11, 2024
Nevertheless, the risk-on mood has somewhat restrained the advancement of safe-haven assets like Silver. The anticipated regulatory easing and fiscal policies under a second Trump term are causing investors to favour higher-risk assets, thereby moderating Silver’s ascent.
Silver (XAG/USD) Price Forecast: Technical Outlook
Silver currently stands at $30.81, showing a moderate increase of 0.43%. The metal’s immediate resistance is projected at $31.24, with further hurdles at $31.53 and $31.76. Supports are found at $30.56, $30.20, and $29.88.
The 50-day and 200-day EMAs are $30.84 and $30.38, respectively, indicating a potential bullish breakout if Silver sustains above the critical $30.87 pivot point. Conversely, slipping below this threshold could trigger significant sell-offs.
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