Gold prices rose this week, testing resistance near $2,693.40, as geopolitical tensions between Russia and Ukraine fueled robust safe-haven demand. This bullish sentiment has strengthened silver, traditionally seen as gold’s sister metal. Analysts point to a rally in gold despite a strong US dollar – a rare occurrence that signals heightened investor caution.
Geopolitical factors and economic uncertainty have strengthened silver’s appeal as a dual-use asset: a safe haven and an industrial metal. As Bitcoin approaches $100,000 and demand for alternative investments increases, silver is benefiting from renewed interest across asset classes.
Interest rate prospects weigh on sentiment
Federal Reserve interest rate expectations remain a key driver for silver. A potential 25 basis point rate cut in December, as implied by the CME FedWatch tool, could provide support for precious metals. However, dovish comments from Fed officials like Austan Goolsbee have created uncertainty as any delay in rate cuts could limit silver’s upside.
At the same time, mixed US economic data, including resilient labor markets and weak manufacturing data, underscore the complex environment. A rising US Dollar Index (DXY) has dampened some of silver’s potential gains, as dollar strength traditionally puts pressure on metals priced in the currency.
Market forecast
The short-term outlook for silver hinges on its ability to break above the $31.29 pivot. A sustained rise would target $31.80 and possibly $32.28, in line with broader strength in gold and safe haven demand. However, if resistance is not broken, prices could push back towards key support levels at USD 30.61 and USD 29.68. Traders should continue to focus on geopolitical developments and policy signals from the Federal Reserve to assess silver’s next move.