Silver (XAG) Daily Forecast: Gains Traction at $29; Bullish Reversal or Sell-off?
US Economic Data and Fed Signals Boost Silver Prices
The US dollar has weakened significantly, retreating from a nearly two-month peak due to recent inflation data. It fell to a multi-day low on Monday, supporting silver prices. Key inflation figures released on Friday have bolstered market confidence in potential rate cuts expected in September and December.
This environment typically enhances alternative investments such as silver, as lower interest rates reduce the appeal of holding traditional currencies, prompting investors to seek higher returns in assets like precious metals.
Looking ahead, traders will focus on the US ISM Manufacturing PMI and broader risk sentiment, expected to influence commodities on Monday.
The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index eased to 2.6% annually in May from 2.7% in April. The core PCE Price Index, excluding food and energy prices, also slowed from 2.8% in April to 2.6% in May, marking its lowest annual rate since March 2021.
The easing inflation pressures indicated by the PCE Price Index could weigh on the US dollar further, providing support to silver prices as investors seek inflation-hedging assets amidst expectations of Fed rate cuts.
Political Instability and Economic Data Boost Silver Prices
Political uncertainty from France’s election and issues in Biden’s debates heighten instability, boosting Silver (XAG/USD) as a safe-haven asset. Meanwhile, China’s declining manufacturing and services sectors suggest economic challenges that could dampen industrial demand for silver.