Silver is consolidating around $31.29, a crucial level that could determine its direction. A rise above this level could lead to a test of the 50-day moving average at $31.66, a break of which could signal a shift toward bullish momentum. On the other hand, a break from last week’s low at $29.68 could lead to a sharper decline, possibly targeting the 200-day moving average at $28.76. Traders are watching these levels closely for signs of continued momentum in either direction.
Is the Fed the Driving Force Behind Silver’s Recent Volatility?
Silver’s significant losses last week were largely related to a stronger dollar, fueled by reduced expectations for aggressive rate cuts from the Federal Reserve. The dollar index rose 1.6% but has now stabilized below a one-year high. This pause has eased some pressure on silver prices, as a weaker dollar makes the metal more accessible to international buyers.
This week, the focus turns to Fed policymakers, with seven officials scheduled to give speeches. Futures indicate a 60% chance of a rate cut in December, although concerns about inflation and rising Treasury yields could prompt the Fed to take a more cautious stance.
What role will economic data play?
Upcoming US economic reports, including housing market data, consumer confidence and manufacturing data, could strongly influence market sentiment. Meanwhile, the yield on ten-year government bonds has risen to 4.43%, due to inflation concerns and optimism around fiscal expansion under newly-elected President Donald Trump. While long-term inflationary pressures may support silver, the near-term challenges stem from the dollar’s continued strength.
Will silver hold or retreat?
In the short term, silver is likely to remain within its current range, with $31.29 as critical resistance and $29.68 as key support. The movement of the dollar, the Fed’s commentary and economic data will be decisive in shaping the metal’s price. Longer term, inflationary trends, coupled with potential fiscal policy, could provide a supportive backdrop for silver.