Silver Weekly Outlook: Fed’s Rate Decision May Test $26 Resistance

Silver (XAG/USD) closed the trading session at $25.18, a substantial 1.49% increase from the previous session. The upcoming week is laden with pivotal economic data that could influence silver prices (XAG/USD).

Market participants are on high alert, gauging the potential impact of each release on the precious metal’s trajectory.

On Tuesday, the market expects building permit data, with forecasts indicating a slight uptick to 1.50M from 1.47 million. A higher-than-expected result could reflect economic confidence and potentially reduce Silver’s appeal as a safe-haven asset, possibly curbing its recent gains.

Wednesday presents a critical event with the Federal Reserve’s interest rate decision. Consensus holds steady at 5.50%, but any deviation could cause volatility. The accompanying FOMC economic projections and subsequent press conferences are also likely to spark a significant market movement.

Investors will scrutinize the Fed’s tone for indications of future policy direction. A hawkish stance could strengthen the dollar, pressuring silver prices, while dovish signals might enhance its lustre.

Thursday’s schedule features the weekly unemployment claims, projected at 214K, marginally higher than the previous 209K. The Philly Fed Manufacturing Index is expected to reveal a contraction at -1.8, contrasting with the previous reading of 5.2.

Weaknesses in manufacturing might bolster silver’s traditional status as a hedge against economic uncertainty.

A robust service sector can temper silver’s safe-haven demand. Similarly, existing home sales data on Thursday, expected at 3.92 million against a previous 4.00 million, will provide additional cues to Silver’s demand dynamics.

Closing out the week, Fed Chair Powell’s speech on Friday will likely impact investor sentiment. Any hints at the Fed’s balancing act between growth and inflation could sway silver prices.

Silver (XAG/USD) is currently trading at $25.18, marking a substantial 1.49% increase from the previous session. The metal has successfully breached the daily pivot point at $24.79, signalling the potential for continued upward momentum.

Immediate Resistance Levels: Silver now approaches a critical resistance level of $25.48. Should it cross this boundary, the path may clear towards more ambitious price points at $26.04 and then $26.76.

On the downside, initial support lies at $24.01. A breach here could see Silver retract to $23.25 and potentially to a more robust support level of $22.30.

The RSI, somewhat elevated at 68, suggests momentum is still on the bull’s side, while the 50-day EMA at $23.43 lends additional support.

The bullish breakout above $24.79 has carved a pathway for potential gains, positioning silver in a bullish trend. However, a reversal below this pivot could trigger a sharp downward correction.