Silver (XAG) Prices: Resistance at $29.38, Will Prices Break Through?
LONDON (July 24) Silver (XAG/USD) continued its upward trend, trading near $29.32 and reaching an intraday high of $29.36. This rally is driven by cautious market sentiment and dovish Federal Reserve expectations as global equity markets decline, boosting safe-haven demand for silver.
The US dollar’s bearish bias, influenced by speculation about potential Fed rate cuts in September and recent US political developments, has also supported silver prices
Looking ahead, traders remain cautious, likely avoiding aggressive bets before the upcoming Advance US Q2 GDP data and the US Personal Consumption Expenditures (PCE) Price Index, scheduled for Thursday and Friday. Meanwhile, traders will monitor flash global PMIs for short-term market cues.
US Dollar Decline and Economic Data Boost Silver Prices
The broad-based US dollar couldn’t maintain its recent gains and slipped from a two-week high, providing support for silver prices. This decline is driven by growing expectations that the Federal Reserve may begin a rate-cutting cycle in September, along with recent US political developments. These factors have pressured the US dollar, allowing silver to remain supported.
The Federal Reserve Bank of Richmond reported a decline in manufacturing activity for July, with the composite manufacturing index falling to -17 from -10 in June. Additionally, the National Association of Realtors reported a 5.4% drop in US existing home sales for June, bringing the seasonally adjusted annual rate to 3.89 million units, the lowest since December and below expectations.
These signs of economic weakness, including deteriorating manufacturing and falling home sales, increase the likelihood of a rate cut, as the Federal Reserve may ease monetary policy in response.
The US dollar’s decline, fueled by expectations of a Federal Reserve rate cut in September and recent US political developments, has bolstered silver prices by increasing its appeal as a safe-haven asset.
Market Uncertainty and Sluggish Chinese Economy May Dampen Silver Price Gains
Silver price gains could be short-lived due to sluggish economic activity in China and an unexpected rate cut by the People’s Bank of China (PBoC). China’s economy is experiencing slow growth, which directly impacts silver demand, as China is the largest consumer of silver.
Silver is widely used in electronic products, and a slowdown in China’s industrial activity reduces demand for these goods, contributing to a decrease in silver prices. These factors create broader market uncertainties, potentially dampening silver’s upward momentum.
Short-Term Forecast
Silver’s bullish trend, trading at $29.32, driven by weak US economic data and dovish Fed expectations. Immediate resistance at $29.78, support at $28.76, closely monitored for market cues.
FXEmpire
