How does market sentiment affect silver?
Profit-taking after last week’s strong rally is weighing on silver, which posted its best weekly gain in almost two years. Meanwhile, the appointment of Scott Bessent as Treasury Secretary has reduced demand for safe havens. Bessent, a veteran Wall Street figure, is seen as pro-business and less likely to pursue aggressive trade policies, reducing fears of economic instability.
Bessent’s appointment has also strengthened stock markets, lowered bond yields and weakened the dollar. Ten-year government bond yields fell from 4.412% to 4.343%, while the dollar index fell 0.8% to 107.22. However, Bessent’s preference for a strong dollar and gradual rates suggests the currency’s retreat could be short-lived.
Traders are also focused on the Federal Reserve’s upcoming FOMC minutes, GDP revisions and October’s key PCE price index, the Fed’s preferred inflation gauge. These data points will influence expectations for a December rate cut, which is currently priced in at a 56% probability by the CME FedWatch tool. Markets are also looking for signals on interest rate policy for 2024, with speculation that fewer cuts may be planned.
Where could silver go?
The near-term outlook for silver is mixed. A break below $31.29 could lead to further declines, with $30.61 providing key support. If this level fails, prices could test the recent low at $29.68. Conversely, a recovery above $31.29 and the 50-day moving average of $31.80 could lead to a rally towards the $32.28-$32.89 retracement zone.
The price of silver this week will largely depend on US economic data and signals from the Federal Reserve. Traders should prepare for increased volatility ahead of Thursday’s Thanksgiving holiday and the shortened Friday session.
Check out our economic calendar for an overview of all today’s economic events.