- Summary:
- Silver price rose on Thursday as two high-profile assassinations in the Middle East added geopolitical risk to keep XAGUSD above $28.00.
Silver price stayed on the ascending trajectory on Wednesday, spurred by geopolitical developments in the Middle East and the impending Fed interest rate cut. The grey metal traded at $28.58 per ounce in the spot market, up by 0.7 percent at the time of writing. The immediate factor at play is the spike in geopolitical temperatures in the Middle East following the assassinations of two prominent leaders of Hamas and Hezbollah. This has triggered a leaning towards safe haven assets, including gold and silver.
Silver price got dented by the decline in Chinese industrial activities in June, and this will shift the focus to the country’s July PMI figures set for release next week. Silver’s use in industrial manufacturing and processing predisposes it to fluctuations beyond gold’s luxury and safe haven drivers.
In the latest development, Germany’s economy also seems to be struggling for growth, with lower-than-expected second quarter GDP figures coming on the heels of soft PMI figures. Europe’s largest economy reported on Tuesday that it’s economy contracted by -0.1 percent in the quarter ending June, from the +0.2 percent growth recorded in the first quarter, and lower than the forecast rate of +0.1 percent. This will likely add to the downward pressure on silver price in the near term.
Momentum indicators
On the daily chart, silver price just bounced back from the lower band on the Bollinger Bands indicator. Note that its recent decline followed a break below the middle band, which aligns with the psychological level of $30.00. That said, however, the Relative Strength Index (RSI) is currently at 42 on the daily chart, signaling a bearish undercurrent.
On the other hand, the 4-hour chart signals that the buying momentum has recently begun to outweigh the selling one. The price is attempting to cross above the upper band on the Bollinger Bands indicator, and the Moving Average Convergence Divergence (MACD) line is above the signal line. These add to the support for the upside in the near term.
Silver price support and resistance levels
The 30-minute chart on silver price favours extension of the upside above $28.50. With the bulls in control, the momentum will likely encounter the first barrier at $28.67. However, extended control at that point could break that mark and potentially result in further gains to test $28.85. Alternatively, the sellers will likely take control below $28.50. In that case, look for the first support at $28.38. However, extended control by the sellers will likely result in a breach of that mark, which could invalidate the upside momentum. In addition, that could extend the decline to potentially test the second support at $28.22.
