Silver (XAG/USD), currently priced at $21.74, experienced a 1.2% increase on Tuesday due to geopolitical unrest, specifically the Israel-Hamas conflict, along with uncertainties surrounding U.S. inflation data and corporate earnings. Despite trading below its trend line support at $22.23 and its 200-Day ($23.36) and 50-Day ($23.00) moving averages, suggesting a bearish bias, the precious metal's outlook appears to be shifting toward bullish.
This shift is largely influenced by signals from Federal Reserve officials hinting at a pause in rate hikes. Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan are among those suggesting a halt in rate hikes, a sentiment echoed by the FedWatch tool which shows rate hike probabilities dropping from 27% to 14%.
The Federal Reserve's cautious approach to future rate hikes aims to mitigate risks associated with abrupt monetary policy changes while addressing high inflation. This strategy, coupled with the geopolitical unrest and evolving situations in the Middle East, is enhancing silver's bullish outlook.
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