Overview
Silver (XAG/USD) has shown a strong performance, closing higher for the third consecutive session as it attempts to break out of a three-week trading range. The current price action indicates a tightening market, setting the stage for a potential breakout.
Current Price Action
On Friday, spot silver settled at $84.63, marking an increase of $6.11 or +7.78%. The trading range for silver is identified between $92.20 and $64.06, with key mid-points that traders are monitoring closely.
Technical Indicators
The market has closed above all four pivot points and the 50-day moving average (MA), which is currently at $81.72. This positioning suggests a bullish outlook as the market heads into the next trading session.
The immediate target for silver is the swing top at $86.32. A successful breakout above this level could lead to further gains towards $92.20 and a major retracement zone between $92.87 and $99.66.
Fundamental Drivers
Several factors have contributed to the recent rally in silver prices:
- The escalating tensions between the United States and Iran.
- A Supreme Court ruling that nullified President Trump's emergency tariff powers.
- The announcement of a new 15% global tariff by the Trump administration.
However, the market's reaction to these developments may be short-lived, as the focus is expected to shift back to Federal Reserve policy and the implications for interest rates.
Interest Rate Outlook
Current economic indicators, including weak GDP growth and persistent inflation, suggest that the likelihood of a Federal Reserve rate cut in June remains below 50%. The CME FedWatch Tool indicates a 44% chance of a rate cut, influenced by stronger-than-expected labor market data.
Looking Ahead
As traders look to Monday, the key question will be whether the technical momentum observed on Friday can be sustained. The narrative surrounding tariffs is likely to diminish, with the focus shifting back to the Federal Reserve's monetary policy decisions.