Silver market range and current position
After hitting a multi-month high of $32.96 on October 4, silver has since been in a range between $32.96 and $30.12. The current market is hovering around $31.54, the midpoint of this range, with the price direction depending on how silver reacts to this pivot.
The strength of the US dollar influences silver
The U.S. dollar, buoyed by expectations of future Federal Reserve rate cuts, hovered around a two-month high on Tuesday, creating resistance for silver prices. A stronger dollar tends to make silver more expensive for holders of other currencies, limiting demand. The dollar index last stood at 103.12, close to its recent peak of 103.36, representing a 2.5% gain from the September 27 low of 100.157.
This strong dollar, together with higher US Treasury yields, creates a challenging environment for silver in the short term. Independent analysts point to the pressure on silver, citing profit-taking and higher government bond yields as factors hindering the metal’s further upward movement.
Federal Reserve interest rate cuts and economic data in pictures
Traders are closely watching the Federal Reserve’s next moves, with an 87% chance of a 25 basis point rate cut in November according to the CME FedWatch tool. Although Fed Governor Christopher Waller urged caution on further rate cuts, the prospect of easing is still expected to support silver prices.
Weak industrial demand from China
In addition to complex market factors, weak industrial demand from China is putting pressure on silver prices. As a major consumer of industrial metals, China’s economic slowdown has led to reduced demand for silver in the manufacturing and technology sectors, further complicating the metal’s price outlook.