The price of silver (XAG/USD) has surged to near the critical resistance level of $28.00 during Thursday’s European trading session. Investors are anticipating further upside as the Federal Reserve (Fed) is expected to begin lowering interest rates starting from the September meeting.
Recent data from the CME FedWatch tool indicates a high probability of rate cuts by the Fed in September, although there is uncertainty regarding the size of the cuts. This speculation has been reinforced by moderate growth in the US Consumer Price Index (CPI) for July, signaling progress towards the Fed’s inflation target of 2%. Both annual headline and core CPI figures have decelerated, further supporting the case for rate cuts.
The anticipation of Fed rate cuts has put pressure on the US Dollar (USD) and bond yields, with the US Dollar Index (DXY) hovering near a seven-month low and 10-year US Treasury yields near weekly lows.
Investors are also looking forward to the release of the US monthly Retail Sales data for July, expected to show a 0.3% increase following a flat reading in June.
Silver Technical Analysis
On a four-hour timeframe, silver price has rebounded after a negative divergence formation, with the 14-period Relative Strength Index (RSI) bouncing back above 24.00. The asset is currently trading above the 50-period Exponential Moving Average (EMA) at around $27.70, indicating a bullish trend in the near term.
A breakout above the immediate swing high of $29.23 from August 2nd could trigger further upside momentum, with the RSI approaching the 60.00 level.
Silver Four-Hour Chart
Silver FAQs
Silver is a precious metal commonly traded among investors for its value and as a hedge against inflation. Factors influencing silver prices include geopolitical events, interest rates, and the strength of the US Dollar. The metal is also used in various industries, such as electronics and solar energy, impacting demand and prices. Additionally, silver prices often correlate with gold prices, with the Gold/Silver ratio providing insights into relative valuations.