The price of silver peaked at the highest level in more than two months. The ascent in question was driven by expectations of impending rate cuts by the Federal Reserve within the year.
Why Is the Silver Price Moving Higher?
Amid a decline in consumer confidence and a deceleration in US manufacturing, investors increased their anticipations of the initial Federal Reserve rate cut in June. As a result, this increased the appeal of maintaining non-yielding investments.
Furthermore, where geopolitical uncertainties increased, and recessionary risks intensified in the United States and Europe, the precious metal functioned as a secure haven. The market focuses on the crucial US Employment report and Powell's forthcoming to gain further understanding regarding the timing of monetary easing.
A Rate Cut Knocks
Investors expect that Jerome Powell will advocate for maintaining interest rates between 5.50% and 5.25% until tangible proof emerges that inflation has reverted to the target level of 2%. Non-yielding assets like Gold and Silver may experience outflows if the Federal Reserve maintains an extended hawkish posture on interest rates.
In addition, market participants will diligently observe the United States ADP Employment Change and JOLTS Job Openings data about February and January, respectively. These datasets will provide a more comprehensive understanding of labor demand.
XAGUSD Technical Analysis
XAGUSD price provided a buying opportunity from the 23.65 to 23.60 zone before reaching the YTD level.
The dynamic 100- and 200-day Simple Moving Average could be crucial price levels in the current context. Any corrective downside pressure is more likely to offer a buying opportunity.
On the bearish side, the Silver price could find support at the 22.50 to 22.45 area before dropping to the 22.00 psychological level. A successful daily close below this line might lower the price towards the 21.35 support level. However, the positive momentum with no sign of divergence signals less possibility of providing a short signal.
On the flip side, the near-term resistance is present at the 24.00 level before reaching the 24.50 supply zone. A sustainable momentum above this level could reclaim the 25.00 level and reach the 26.00 level, the December 2023 swing high.
