In the unfolding chapters of 2024, the Silver Spot Price (XAGUSD) narrates a tale of challenge, shedding 3% amidst the backdrop of a resilient Greenback.
Witnessing back-to-back weekly losses, it stands on the brink of a potential third decline. The shifting sentiment surrounding the Federal Reserve’s monetary policy outlook cast a shadow, steering the trajectory of this white metal.
With expectations dwindling for rate cuts in March, the Greenback’s resilience emerged as a dominant narrative, with probabilities plummeting from 79% to 65.7% within a week, as revealed by CME’s FedWatch Tool. As the week unfolds, the spotlight shifts to the eagerly anticipated US inflation data, a pivotal compass guiding traders in deciphering the monetary policy outlook of the world’s largest economy, poised to sway the direction of the Silver Spot Price.
Technical
The Silver Spot Price has been navigating a defined range, encapsulated by a support level at 21.873 per ounce and a resistance level at 25.912 per ounce.
The support arose from a robust surge following oversold RSI conditions, while the resistance emerged after a sharp downturn amid overbought RSI conditions. Presently, the spot price lingers within a consolidation phase, adopting a sideways movement akin to a rectangle pattern.
The critical juncture lies in an anticipated breakout from this pattern. A decisive move, accompanied by robust trading volumes, could pave the way for extended movements in the breakout’s direction. An upward breakout might propel the price towards retesting the 25.912 per ounce level, contingent upon supportive upside volumes and a breakout above the 100-day moving average. Conversely, a downward breakout could trigger interest around the 21.873 per ounce level if bearish pressures prevail.
Summary
The Silver Spot Price in 2024 confronts challenges amid a resilient Greenback and wavering market sentiment tied to the Federal Reserve’s policy outlook. With probabilities shifting away from rate cuts as soon as March, the spotlight now turns to crucial US inflation data, holding the power to guide traders’ perception and influence the white metal’s trajectory. A breakout from the consolidation phase may lead to pronounced movements, directing attention toward key support and resistance levels.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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