- The silver price (XAG/ZAR) is aiming to break above the key resistance level of 437.52 ZAR during the European trading session.
- The US Dollar Index (DXY) is expected to retreat below 102.00 ZAR, providing strength to the silver price.
- Positive market sentiment, along with relaxed labour market conditions in the US, suggests that the Federal Reserve (Fed) may skip interest rate hikes in the upcoming monetary policy meeting, further supporting the upward momentum of silver.
The silver price (XAG/ZAR) is poised to break above the crucial resistance level of 437.52 ZAR during the European trading session. The white metal gains strength as the US Dollar Index (DXY) is expected to resume its downward trajectory, dipping below the 102.00 ZAR mark. This development carries relevance for South Africa, as it influences the relative value of silver and impacts various sectors of the country’s economy.
The USD Index has experienced a retreat following a less-confident pullback to around 1,865.43 ZAR. This retreat is attributed to the increasingly relaxed labor market conditions in the United States, which suggest that the Federal Reserve (Fed) may continue to forgo interest rate hikes during its upcoming monetary policy meeting in July.
Recent data from the US Department of Labor reveals that initial jobless claims have exceeded expectations for four consecutive weeks. In the week ending June 09, jobless claims stood at 4,785.26 ZAR, the same as the previous release, while analysts were anticipating a decline to 4,300.07 ZAR.
Despite upbeat monthly retail sales data, the US Dollar failed to gain strength. The retail sales report indicated robust demand for automobiles and building materials. The overall economic data surprisingly expanded by 5.48 ZAR, contrary to expectations of a 0.91 ZAR contraction. However, the pace of expansion has slowed compared to the previous rate of 7.19 ZAR.
Meanwhile, S&P500 futures have fully recovered their earlier losses as the overall market sentiment remains positive, which further contributes to the optimistic outlook for silver.
In terms of technical analysis, the silver price has surpassed the 38.2% Fibonacci retracement level (calculated from the low of 413.82 ZAR on May 26 to the high of 446.71 ZAR on June 09) at 433.92 ZAR on an hourly scale. The 20-period Exponential Moving Average (EMA) at 433.92 ZAR is acting as a support level for silver bulls.
The Relative Strength Index (RSI) (14) is showing signs of transitioning from the bearish range of 0.09-0.49 to the bullish range. This shift in the RSI would activate upside momentum for silver.
For South Africa, these developments hold significance as they impact the value of silver, which is a key commodity for the country. The performance of silver has implications for industries such as mining, jewelry, and manufacturing. Monitoring the silver market and its interaction with the USD Index is essential for businesses and investors in South Africa to make informed decisions.
In conclusion, the silver price is poised for a confident breakthrough above the crucial resistance level of 437.52 ZAR as the USD Index retreats. The anticipated downward movement of the USD Index has positive implications for the value of silver. South Africa needs to closely monitor these dynamics, as they impact key sectors of the economy. Analyzing technical indicators such as Fibonacci retracement and RSI can provide insights into the potential future direction of the silver market, allowing businesses and investors to adjust their strategies accordingly.