In Thursday’s trading session, the Silver price (XAG/USD) trades neutral at about $24.20. Despite the current stagnation, the precious metal has the potential for upward movements due to dovish sentiment regarding the Federal Reserve’s monetary policy and weaker-than-expected US Jobless Claims data.
Recognizing the deceleration of inflation, the Federal Reserve assured no rate increases in 2024 and suggested a 75 basis points reduction. This dovish stance from the Fed has led markets to anticipate rate cuts in March and May. The release of soft Personal Consumption Expenditures (PCE) data from November, the Fed’s favored inflation metric, further solidified the expectation of a rate decrease. The resulting weakening of the US Dollar and yields has favored the advance of silver.
The Jobless Claims for the week ending in December 22 rose to 218K, surpassing expectations of 210K and accelerating from the previous week’s 206K. This increase in jobless claims applies additional pressure on the US Dollar, further benefiting silver.
While US bond yields are recovering slightly, they are still near multi-month lows. The 2-year rate stands at 4.27%, while the 5-year and 10-year yields are observed at 3.82% each. These upward movements in yields may limit the upside potential for silver as higher yields represent an opportunity cost for investors.
The indicators on the daily chart suggest a bullish bias, although there are signs of buying exhaustion. The Relative Strength Index (RSI) is flat and in positive territory, indicating a loss of buying momentum. Similarly, the Moving Average Convergence Divergence (MACD) shows flat green bars, highlighting a lack of strong buying interest. The short-term outlook remains mixed, but the price of silver remains above the 20,100, and 200-day Simple Moving Averages (SMAs), suggesting bullish strength in larger time frames.
Support Levels: $24.00 (20-day SMA), $23.65 (200-day SMA), $23.50.
Resistance Levels: $24.40, $24.60, $24.80.
The Silver price (XAG/USD) trades near $24.20 with a neutral stance. However, the dovish sentiment from the Federal Reserve and weaker-than-expected US Jobless Claims data create room for potential upward movements. The US Dollar is under pressure due to increasing jobless claims and low bond yields. While the technical outlook shows signs of buying exhaustion, the price of silver remains above key moving averages, indicating bullish strength in larger time frames. As the market continues to react to economic data and the Fed’s monetary policy, the silver price may experience further fluctuations.
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