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May 27, 2024
PI Global Investments

Silver Gained As Fears Of Escalating Conflict In the Middle East Lifted The Safe-Haven Appeal

prices surged by 1.58%, settling at 72480, driven by escalating Middle East tensions, which bolstered the appeal of the precious metal as a safe-haven asset. Despite stronger-than-expected U.S. inflation data, which typically strengthens the dollar and Treasury yields, silver benefited from geopolitical uncertainties. The United States and Britain initiated strikes against Houthi movement-linked sites in Yemen, prompting concerns over regional stability.

The Federal Reserve is widely expected to maintain interest rates between 5.25% and 5.50%, but the outlook for March remains slightly hawkish. Fed policymakers, including Raphael Bostic and John Williams, along with Cleveland Fed President Loretta Mester, indicated that an interest rate cut in March is unlikely. Mester emphasized the need for more evidence of a sustained decline in inflation towards the 2% target. She highlighted the importance of maintaining a restrictive monetary policy, suggesting that further easing is contingent on improvements in various economic indicators, including goods prices, housing, and wage growth.

From a technical perspective, the silver market is undergoing short covering, evidenced by a 30.81% drop in open interest to settle at 21653. Despite the decline in open interest, silver prices surged by 1126 rupees. The support level is identified at 71715, and a breach below could lead to a test of 70950 levels. On the upside, resistance is anticipated at 73245, and a move above this level might propel prices to test 74010.

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