Forex Trading

Silver Weekly Outlook: Fed’s Rate Decision May Test $26 Resistance

Silver (XAG/USD) closed the trading session at $25.18, a substantial 1.49% increase from the previous session. The upcoming week is laden with pivotal economic data that could influence silver prices (XAG/USD).

Silver Price Chart - Source: Tradingview

Market participants are on high alert, gauging the potential impact of each release on the precious metal’s trajectory.

Building Permits & Construction Data

On Tuesday, the market expects building permit data, with forecasts indicating a slight uptick to 1.50M from 1.47 million. A higher-than-expected result could reflect economic confidence and potentially reduce Silver’s appeal as a safe-haven asset, possibly curbing its recent gains.

Federal Reserve’s Interest Rate Decision

Wednesday presents a critical event with the Federal Reserve’s interest rate decision. Consensus holds steady at 5.50%, but any deviation could cause volatility. The accompanying FOMC economic projections and subsequent press conferences are also likely to spark a significant market movement.

Investors will scrutinize the Fed’s tone for indications of future policy direction. A hawkish stance could strengthen the dollar, pressuring silver prices, while dovish signals might enhance its lustre.

Labor and Manufacturing Data

Thursday’s schedule features the weekly unemployment claims, projected at 214K, marginally higher than the previous 209K. The Philly Fed Manufacturing Index is expected to reveal a contraction at -1.8, contrasting with the previous reading of 5.2.

Weaknesses in manufacturing might bolster silver’s traditional status as a hedge against economic uncertainty.

Service Sector and Housing Market Insights

A robust service sector can temper silver’s safe-haven demand. Similarly, existing home sales data on Thursday, expected at 3.92 million against a previous 4.00 million, will provide additional cues to Silver’s demand dynamics.

Powell’s Address to Set the Tone

Closing out the week, Fed Chair Powell’s speech on Friday will likely impact investor sentiment. Any hints at the Fed’s balancing act between growth and inflation could sway silver prices.

Silver (XAG/USD) Price Forecast: Weekly Outlook

Silver (XAG/USD) is currently trading at $25.18, marking a substantial 1.49% increase from the previous session. The metal has successfully breached the daily pivot point at $24.79, signalling the potential for continued upward momentum.

Silver Price Chart - Source: Tradingview

Immediate Resistance Levels: Silver now approaches a critical resistance level of $25.48. Should it cross this boundary, the path may clear towards more ambitious price points at $26.04 and then $26.76.

Immediate Support Levels:

On the downside, initial support lies at $24.01. A breach here could see Silver retract to $23.25 and potentially to a more robust support level of $22.30.

Technical Indicators:

The RSI, somewhat elevated at 68, suggests momentum is still on the bull’s side, while the 50-day EMA at $23.43 lends additional support.

The bullish breakout above $24.79 has carved a pathway for potential gains, positioning silver in a bullish trend. However, a reversal below this pivot could trigger a sharp downward correction.

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