Silver (XAG) Daily Forecast: Can Declining Yields Push Prices Beyond $31.84 Resistance?

Market Overview

Silver (XAG/USD) climbed for the fifth consecutive day during Asian trading on Wednesday, reaching around $31.59 per troy ounce. The precious metal continues to attract investors as U.S. Treasury yields decline, following disappointing manufacturing data released on Tuesday.

The drop in yields has bolstered silver’s appeal as a safe-haven asset, particularly as geopolitical uncertainties in the Middle East add to market volatility. Investors remain cautious, turning to precious metals to hedge against potential risks.

Silver Boosted by Declining Yields and Manufacturing Weakness

On the economic front, silver has benefited from a significant drop in U.S. Treasury yields. The 2-year and 10-year yields currently stand at 3.95% and 4.03%, respectively, after the NY Empire State Manufacturing Index fell by 23 points to -11.9 in October.

This marks the lowest reading in five months, a stark contrast to the 11.5 growth recorded in September.

The contraction in business activity has driven investors toward non-yielding assets like silver, which becomes more attractive as bond yields fall.

Federal Reserve Rate Cut Expectations Capped

While silver’s momentum remains strong, expectations of aggressive rate cuts by the Federal Reserve (Fed) in 2024 have moderated. Recent robust U.S. employment and inflation data have tempered predictions for drastic monetary easing.

According to the CME FedWatch Tool, there is a 94.1% probability of a 25-basis-point cut in November, but no indication of a larger 50-basis-point reduction.

Atlanta Fed President Raphael Bostic has also signaled that he expects just one more 25-basis-point rate cut this year, based on the Fed’s latest projections.

Short-Term Forecast

Silver (XAG/USD) continues its upward trend, trading at $31.59. A break above $31.84 may lead to further gains, while support at $30.98 could limit downside risks.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $31.59, up 0.27%, continuing its upward momentum. On the 4-hour chart, silver is holding above the pivot point at $31.42, which acts as a key level of support.

Immediate resistance is found at $31.84, with further targets at $32.29 and $32.71 if bullish momentum continues. On the downside, support rests at $30.98, and a break below could trigger a pullback to $30.57 or lower.

The 50-period EMA at $31.27 and the 200-period EMA at $31.14 provide additional support for silver’s current trend. Overall, silver remains bullish above $31.42, but a break below this level could signal a sharp sell-off.