Silver price forecast ahead of fresh sanctions on Russia

Silver price has edged higher in Thursday’s session, even as it remains within a horizontal channel for over a week now. Investors are keen on the new sanctions that the President Biden is set to impose on Russia in the course of the day.

Fundamentals

President Biden’s trip to Europe, which began on Wednesday, is aimed at strengthening unity between the two regions, tightening the existing sanctions against Russia, and reducing the continent’s reliance on Russia’s energy by redirecting LPG shipments to the region.

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The announcement on fresh sanctions comes amid increased concerns over the likelihood of Russia using chemical weapons against Ukraine. While the Ukrainian president has stated that Russia-Ukraine talks are headed in the right direction, he admits that they remain confrontational. With the heightened geopolitical tensions in eastern Europe, silver price will likely remain steady above the crucial level of $24 in the short to medium term.   

As the safe-haven demand continues to offer support to precious metals, talks on Fed’s interest rate hikes will likely curb its upward potential. Earlier in the week, the Fed Chair indicated that the central bank is ready to hike rates by a half-percentage point in its next meeting if needed.An environment of higher interest rates is usually bearish for silver price.  

In a Bloomberg interview on Tuesday, St. Louis Fed President, James Bullard states that the Fed should move aggressively to deal with the inflationary pressures that are already too high. Later on Thursday, Chicago’s Fed President, Charles Evans, Fed Governor Christopher Waller, and Atlanta’s Fed President Raphael Bostic are set to deliver their speeches.

Silver price forecast

The critical level of 24.00 remains a steady support zone for silver price since Russia invaded Ukraine about a month ago. Indeed, with the formation of a golden cross earlier in March, it extended its gains to its highest level since June 2021 at 26.96. A golden cross occurs when a short-term moving average (50-day EMA) crosses over a long-term one (200-day EMA) to the upside.

Even after pulling back from its recent high, it has remained above the 200-day EMA. Most recently, silver price has been range-bound as concerns over the Ukraine-Russia war counter bets on Fed’s interest rate hikes.

In the short term, I remain bullish on the precious metal and expect it to hold steady above 24.00.  It will likely continue to trade within a horizontal channel of between 24.49 and 25.47. As a reaction to the new US sanctions against Russia, it may rise further to 25.81 as the bulls gather enough momentum to retest the higher zone of 26.00.