The technical picture shows a critical moment for silver traders. The metal has built strong support at $29.64, reinforced by a nearby bottom at $29.68. Current trading above the $30.61 pivot point has transformed this level into a key support zone, with prices last trading at $30.85.
Bulls are facing significant resistance, with the 50-day moving average of $31.77 providing the first major hurdle. Further ahead lies a significant retracement zone stretching from $32.28 to $32.89. Given the prevailing downtrend, sellers are expected to emerge once prices approach this resistance band.
Government bond yields indicate a market shift
The decline in 10-year Treasury yields to 4.219%, reaching the lowest point since October 30, provided new support for silver prices. Lower yields tend to increase the appeal of precious metals by lowering the opportunity cost of holding non-yielding assets. This development is gaining significance as the Federal Reserve signals a potential “gradual” approach to lowering interest rates, according to recent meeting minutes.
Political risks add market complexity
The dollar’s retreat to its lowest level since November 12 has supported silver prices. However, President-elect Trump’s proposed rate hikes for China, Mexico and Canada could fuel domestic inflation, potentially forcing the Fed to maintain higher interest rates for longer than expected. According to CME Group’s FedWatch Tool, market participants currently estimate a 66.3% probability of a rate cut in December.
Bears maintain the upper hand despite recent rally
The short-term outlook for silver appears bearish, despite recent gains. While falling government bond yields provide some support, the combination of technical resistance and potential inflationary pressure from the proposed trade policy suggests limited upside potential. Traders should watch for selling pressure near the $31.77-$32.89 resistance zone, with the upcoming US jobs report potentially driving more volatility.
More information in our Economic Calendar.