Technical levels: support and resistance in focus
The precious metal is currently finding minor support at the former high of $30.19, with additional support levels at $29.72 and a key pivot at $29.50. The 50-day moving average serves as primary support, although the current flat trajectory is not providing significant momentum.
The Fed’s dovish stance is fueling silver’s rally
Last week’s larger-than-expected 50 basis point rate cut by the Federal Reserve was a major catalyst for silver’s recent rally. This rate cut has lowered the opportunity cost of holding non-yielding assets like silver, increasing its appeal to investors. Chicago Fed President Austan Goolsbee’s indication that interest rates may be cut further in the coming year has reinforced the bullish outlook for silver.
The Chinese stimulus package: double-edged sword for silver
China’s central bank has introduced its biggest stimulus package since the pandemic, aiming to combat deflationary pressures. While this initiative could potentially boost demand for Chinese bullion, it could also shift investment towards Chinese stocks and real estate. This dual effect creates a complex situation for silver markets as investors weigh the potential impact on demand and price movements.
Geopolitical tensions support the demand for safe havens
Silver is up more than 30% in 2024, supported by ongoing conflict in the Middle East and increased central bank demand for safe-haven assets. Tensions between Israel and Hezbollah have further cemented silver’s status as a store of value, with Israeli military actions in Lebanon heightening global geopolitical concerns.
Key economic data on traders’ radar
Traders are now focusing on the release of critical US economic data, particularly Fed Chairman Jerome Powell’s comments on Thursday and Friday’s Personal Consumption Expenditures (PCE) data. These events are expected to provide insight into the Fed’s stance on additional monetary easing, potentially impacting silver prices.
Market forecast: bullish trend with warnings
The short-term outlook for silver appears bullish, depending on future economic data supporting the current dovish sentiment. If the PCE data and Powell’s comments align with expectations of continued monetary easing, silver could see further price appreciation.