Silver Daily Forecast: Analyzing the Impact of Market Sentiment on Silver Prices

Market Overview

Silver (XAG/USD) has sharply dropped, retreating from its early morning high of $32.28 to $31.78. This decline follows a growing risk-on market sentiment, where investors, feeling more optimistic, are shifting their focus from safe-haven assets like silver toward riskier investments.

A contributing factor is China’s recent stimulus measures, encouraging investments in other markets such as stocks and bonds and reducing demand for silver. However, silver remains supported by a weakening U.S. dollar and global uncertainties. The Federal Reserve’s plans for aggressive monetary easing are putting pressure on the dollar, making silver more attractive to investors looking for alternatives.

China’s Stimulus and Impact on Silver Demand

The People’s Bank of China (PBOC) recently cut the reserve requirement ratio (RRR) by 50 basis points and lowered the seven-day repo rate from 1.7% to 1.5%. These measures stimulate economic growth, creating a risk-friendly environment that draws investments away from safe-haven assets like silver.

Despite the temporary dip in demand, silver remains a key investment amid ongoing global uncertainties. Investors are cautious, and the need for security keeps silver in demand, particularly in turbulent economic conditions.

U.S. Dollar Weakness Supports Silver Prices

On the U.S. side, the dollar’s decline has bolstered silver prices. The CME Group’s FedWatch Tool indicates a 75% probability of a 0.50% rate cut by the Federal Reserve in November. Lower interest rates make silver, a non-yielding asset, more appealing in comparison to bonds.

Additionally, U.S. economic data has shown signs of weakness, with Consumer Confidence falling to 98.7 in September, down from 105.6 in August, and a decline in manufacturing activity. These factors are likely to continue supporting silver in the coming months.

Short-Term Forecast

Silver (XAG/USD) faces downside pressure after falling to $31.78. Immediate support at $31.68 could break, pushing prices toward $31.51, while resistance sits at $32.24.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $31.78, down 0.98%, as it struggles to break above the key pivot point at $31.89. If silver fails to hold current support at $31.68, it could see further downside towards $31.51 and $31.33. On the upside, immediate resistance is $32.24, followed by $32.47 and $32.71.

The 50-day EMA at $31.40 is a crucial support level, while the 200-day EMA at $30.67 suggests a long-term bullish trend remains intact. A break below $31.68 could trigger more profit-taking, especially after the 23.6% Fibonacci retracement level at $31.89 was violated. In summary, silver remains bearish, below $32, with a break above signaling renewed bullish momentum.