Silver’s upward move is meeting resistance at $31.29, $31.54 and the 50-day moving average at $31.74. However, a sustained rally is unlikely unless the market closes above the 50-day moving average. On the downside, critical support is at $29.68, with major support at the 200-day moving average of $29.19.
These technical levels are likely to drive silver’s short-term movements, especially if there is no clear breakout signal.
Expectations about Fed rate cuts are weighing on the dollar
The market is increasingly pricing in a 73% probability of a 25 basis point rate cut at the Federal Reserve’s December meeting, up from 66% on Monday. This sentiment followed comments from Fed Governor Christopher Waller, who expressed support for easing monetary policy due to inflation trends. UBS expects another 100 basis points of cuts through 2025, further increasing the appeal of non-yielding assets like silver.
Ten-year government bond yields, while rising slightly, remain near their lowest levels since October, while the US dollar fell 0.2%. These factors combined to make silver more attractive to investors looking to hedge against economic uncertainties.
Geopolitical and economic factors create complexity
Silver continues to attract safe haven demand due to geopolitical tensions, especially in the Middle East. A US-brokered ceasefire between Israel and Hezbollah faltered on Monday, adding to market uncertainty.
Investors are also keeping a close eye on key U.S. economic data, including job openings, Wednesday’s ADP employment report and Friday’s payroll data. These reports will provide critical insights into the labor market and influence the Fed’s policy expectations.