HG MARKETS:

Silver prices have recently reversed their previous decline, gaining traction around the $29.07 mark and reaching an intra-day high of $29.13. This uptick is primarily attributed to a weaker US dollar, which has lost strength due to rising market sentiment. Expectations that the Federal Reserve might cut interest rates as early as September, driven by easing inflation pressures in the US, are also contributing to this movement.

The weakening of the US dollar is further supported by market predictions of an earlier rate-cutting cycle by the Federal Reserve, despite its projection of only one rate cut in 2024. Lower US Treasury bond yields, hitting their lowest levels since April, have weakened the dollar, thereby supporting silver prices. Additionally, ongoing geopolitical tensions in the Middle East and renewed political uncertainties in Europe are bolstering silver prices.

Economic data from the US show a rise in the Producer Price Index (PPI) for final demand by 2.2% year-over-year in May, below the expected 2.5% and down from April’s 2.3%. Core PPI, which excludes food and energy, rose by 2.3% annually, also below forecasts. On a month-on-month basis, PPI decreased by 0.2%, while core PPI remained unchanged.

The Consumer Price Index (CPI) for May showed no change, marking the first time this has happened since last June, with annual inflation easing slightly to 3.3% from April’s 3.4%. Additionally, the US Department of Labor reported a higher-than-expected rise in initial jobless claims to 242,000 from the previous week’s 229,000.

These economic indicators, alongside the anticipation of earlier rate cuts by the Fed, have contributed to a decline in US Treasury bond yields, weakening the dollar and supporting silver prices.

Silverhas halted its previous decline, showing positive traction around $29.07 and reaching an intra-day high of $29.13. The primary drivers are the weaker US dollar, influenced by market sentiment and potential Federal Reserve rate cuts expected as soon as September.

Currently trading at $29.05, down 0.16% in the 4-hour chart, silver’s key pivot point is at $29.39, a critical level for immediate price movements. Resistance levels are at $29.81, $30.24, and $30.79, which could see increased selling pressure. On the downside, support levels are at $28.67, followed by $28.00 and $27.51.

Technical indicators suggest the market sentiment. The 50-day Exponential Moving Average (EMA) is at $29.74, and the 200-day EMA is at $29.45. There is significant support around the $28.67 level, indicating a potential bullish reversal if silver consolidates above this support. However, the market remains bearish below $29.40, and a break above this level could shift the outlook to a more bullish stance.