XAG/USD rises toward $31.50, driven by increased safe-haven demand
FUNDAMENTAL OVERVIEW:
- Silver prices are bolstered by safe-haven demand amid escalating conflict in the Middle East, as Israel initiates a “limited” ground operation against Hezbollah positions near the southern Lebanon border.
- Meanwhile, Fed Chair Powell signaled that upcoming rate cuts are likely modest, diminishing the appeal of non-yielding silver.
During Tuesday’s European session, silver prices (XAG/USD) ended a two-day losing streak, trading around $31.45 per troy ounce. The rise is supported by safe-haven demand due to escalating geopolitical tensions in the Middle East.
Silver prices faced downward pressure following recent comments from Federal Reserve Chairman Jerome Powell. Powell indicated that the central bank is in no rush to lower its benchmark rate, emphasizing that the recent 50 basis point cut should not signal similarly aggressive future actions, with upcoming rate changes expected to be more modest. Prolonged higher interest rates make non-yielding silver less attractive to investors seeking better alternatives.
Silver prices have come under pressure due to weaker-than-expected demand growth from China, further impacted by data showing a decline in manufacturing activity. China’s Caixin Manufacturing PMI dropped to 49.3 in September, signaling contraction, down from 50.4 in August. As one of the world’s largest manufacturing hubs, China’s significant industrial demand for silver amplifies the effect of these demand concerns.
SILVER TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Silver is currently trading within an up channel.
Silver is positioned above 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 31.50
Immediate support level: 30.96
HOW TO TRADE SILVER
Silver has been steadily climbing, forming higher highs, and after a recent surge, the price briefly reversed to the downside. However, it has since bounced back from the support zone and is moving upward again. Silver is trading near its immediate resistance zone, and if this level is breached, further upside momentum is likely.