Higher yields on US government bonds are also testing the appeal of silver. Despite a recent rate cut by the Federal Reserve, skepticism remains about a prolonged easing policy, especially given inflation expectations as fiscal policy stimulates economic activity. Higher yields increase the opportunity cost of holding silver and other non-yielding assets, potentially deterring investment unless there is a notable shift in interest rate sentiment.
What economic data could impact silver this week?
Traders are keeping a close eye on some key US economic data this week, with the October Consumer Price Index (CPI) due on Wednesday, followed by the Producer Price Index (PPI) on Thursday and retail sales on Friday. These reports will provide insight into inflation and economic health, which could influence the Fed’s policy path. Additionally, statements from Fed Chairman Jerome Powell and other officials this week may provide further perspective, adding volatility to silver as traders assess the interest rate outlook.
Will physical demand support silver prices?
Despite the cautious outlook, silver could find support from physical demand as prices approach critical levels. Analysts note that the range of $28.50 to $27.75 could generate buying interest among industrial users and jewelers, potentially helping to stabilize prices.
While gold could see similar demand as it approaches the $2,500 level, silver’s industrial use could see a stronger bid if prices fall to that level. In the short term, however, a strong dollar and high Treasury yields remain crucial to silver’s bearish tone, likely limiting any recovery unless the dollar weakens or demand from industrial buyers increases sharply.