At 11:19 GMT, XAG/USD is trading $34.61, down $0.25 or -0.72%.
Yields on government bonds are rising, increasing pressure on silver
U.S. Treasury yields rose to a three-month high, supporting the dollar but putting additional pressure on silver. The 10-year yield reached 4.2316% as traders reconsider how much more the Federal Reserve could cut rates after recent economic data showed continued strength in the U.S. economy. Higher yields tend to make non-interest-bearing assets like silver less attractive, but the metal has managed to hold its ground as risk-averse investors look for safe-haven alternatives amid ongoing geopolitical tensions in the Middle East.
Election uncertainty and strong dollar influence Silver
Silver has also benefited from safe-haven demand as the upcoming US elections increase uncertainty in the markets. Investors are bracing for potential volatility with less than two weeks until Election Day. The chances that Donald Trump will beat Kamala Harris have increased slightly, but the polls remain tight. Meanwhile, the US dollar has strengthened as expectations for deep rate cuts have waned. This has typically put pressure on precious metals, but silver has bucked this trend and emerged alongside gold as a hedge against political and economic instability.
Russian Central Bank switches to silver
An important development on the silver market is Russia’s decision to include silver in the central bank’s reserves for the first time. The move is part of a broader effort to diversify precious metals reserves, which already include gold, platinum and palladium. The addition of silver could increase demand, potentially supporting prices in the medium term. Historically, central banks have focused on gold, but this diversification may indicate that silver is undervalued. Analysts predict this could lead to a 50% price increase over the next two years, driven by both central bank demand and industrial applications such as solar photovoltaics and electronics.
Short-term forecasting
In the short term, silver is still at a critical juncture. While longer-term fundamentals, including industrial demand and central bank purchases, are optimistic, short-term risks are increasing. Failure to hold the price above $34.35 could lead to a correction phase, potentially taking the price down to $32.52. However, if silver can consolidate and break the USD 35.40 resistance, the next leg could unfold. For now, traders should pay attention to the volatility surrounding the US elections and the Federal Reserve’s next moves on interest rates.