Silver Price Forecast: XAG/USD nosedives to $27.30 as Middle East tensions ebb

Source Fxstreet
Apr 22, 2024 13:42
  • Silver price witnesses bloodshed drops vertically to $27.30 as safe-haven demand eases.
  • The demand for safe-haven assets weakens as fears of widening Middle East conflict ease.
  • The US Dollar and bond yields rise as investors see the Fed keeping interest rates higher for longer.

Silver price (XAG/USD) faces an intense sell-off and drops to $27.30 in Monday’s early American session. The white metal falls on the backfoot as investors expect that conflicts in the Middle East region will not widen further. Fears from Middle East tensions ebb after Iran commented that currently, they are not planning any immediate retaliation to Israel’s limited attack on Isfahan.

Receding risks of further escalation in conflicts between Israel and Iran has weakened demand for safe-haven assets. This has improved investors’ appetite for risky assets. The S&P 500 opens on a bullish note, suggesting a cheerful market mood. 10-year US Treasury yields rise to 4.65% as investors expect that the Federal Reserve (Fed) would be a laggard in unwinding the restrictive policy framework compared with other central banks from developed nations.

The CME FedWatch tool shows traders pricing in the September policy meeting, when the central bank could start reducing interest rates. Expectations for Fed rate cuts have shifted to September from June as policymakers expect that progress in inflation declining to the 2% target has stalled.

On Friday, Chicago Fed Bank President Austan Goolsbee said, “Given the strength of the labor market and progress on easing inflation seen over a longer arc, I believe the Fed's current restrictive monetary policy is appropriate," Reuters reported.

This has also improved the appeal of the US Dollar. The US Dollar Index (DXY) jumps higher to 106.30 as the Fed maintains that interest rates need to remain at their current levels for a longer period.

Silver technical analysis

Silver price falls sharply to near the 20-day Exponential Moving Average (EMA), which trades around $27.20 after failing extend upside above three-year high of $29.80. The horizontal support plotted from April 14 high at $26.09 will be a major cushion for the Silver price.

The 14-period Relative Strength Index (RSI) slips into the 40.00-60.00 range, suggesting that momentum is not bullish anymore. However, the bullish bias is intact.

Silver daily chart

XAG/USD

Overview
Today last price 27.29
Today Daily Change -1.40
Today Daily Change % -4.88
Today daily open 28.69
 
Trends
Daily SMA20 26.93
Daily SMA50 24.94
Daily SMA100 24.13
Daily SMA200 23.72
 
Levels
Previous Daily High 28.94
Previous Daily Low 28.07
Previous Weekly High 29.02
Previous Weekly Low 27.62
Previous Monthly High 25.77
Previous Monthly Low 22.51
Daily Fibonacci 38.2% 28.6
Daily Fibonacci 61.8% 28.4
Daily Pivot Point S1 28.19
Daily Pivot Point S2 27.7
Daily Pivot Point S3 27.32
Daily Pivot Point R1 29.06
Daily Pivot Point R2 29.43
Daily Pivot Point R3 29.93

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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