Geopolitical uncertainty drives demand for safe havens
Geopolitical tensions, especially in the Middle East, continue to support silver as a safe haven. The escalating conflict between Israel and Palestine has added a layer of uncertainty to global markets, driving investors toward precious metals. Although the US dollar strengthened following the release of robust US payroll data, silver’s dual role as an industrial asset and as a safe haven allowed it to withstand the dollar’s rise better than gold.
Fed policy and economic data
The strong US Non-Farm Payrolls report shows that 254,000 jobs were added in September, significantly exceeding expectations. These robust data dampened hopes for major Fed rate cuts, with traders now expecting only a 25 basis point cut in November. Rising Treasury yields and a stronger dollar put pressure on precious metals, but industrial demand for silver helped offset some of this disadvantage.
Fed Chairman Jerome Powell’s cautious stance on future rate cuts, driven by strong economic growth, is expected to limit aggressive easing. Silver traders should keep a close eye on upcoming Fed meetings and additional economic data, including Thursday’s Core CPI report, as they will play a crucial role in shaping the direction of the market.
Market Forecast: Bullish Potential, Be Cautious
Silver remains within striking distance of its 12-year high of $32.96. A sustained break above this level could push prices towards the next resistance at $35.40. However, downside risks remain if silver falls below the key support at $30.88. The market is also bracing for potential volatility, driven by ongoing geopolitical tensions and further US economic data.
In the near term, silver’s strength is likely to continue, with industrial demand and safe haven buying providing support. Traders should remain vigilant, however, as shifts in Fed policy or geopolitical developments can quickly change market sentiment.