silver prices managed to find a temporary support level around $29.25 on Thursday, following a significant drop of nearly 4% the previous day. Despite this brief stabilization, the outlook for silver remains pessimistic as the Federal Reserve’s recent comments indicate a reduced likelihood of interest rate cuts in the near future. With the Fed having recently lowered rates by 25 basis points to a target range of 4.25% to 4.50%, expectations for only two cuts by 2025 suggest limited relief for silver investors.
The Fed’s assertive stance has led to a resurgence of the US Dollar and an increase in Treasury yields. In the European trading session on Thursday, the US Dollar Index dipped to approximately 107.90 after reaching a two-year peak of about 108.30. Simultaneously, the yield on 10-year Treasury bonds climbed above 4.50%. The rising yields on interest-bearing assets elevate the opportunity costs associated with holding non-yielding investments like silver .
According to the Fed’s dot plot projections, the Federal Funds rate is expected to decline to around 3.9% by 2025, contrasting with earlier predictions that suggested four cuts within the same timeframe. This shift suggests that policy easing will proceed more gradually as inflationary pressures in the US have remained relatively stable in recent months. Federal Reserve officials have expressed caution around future rate adjustments, citing robust economic growth as a contributing factor.
From a technical perspective, silver prices are currently hovering near the 200-day Exponential Moving Average (EMA) of approximately $29.40. The recent decline has seen prices break below the November low of $29.65 and test an upward trendline around $29.50, established from a low of $22.30 earlier in the year. The 14-day Relative Strength Index (RSI) has fallen into the bearish range of 20.00 – 40.00, signaling potential for continued downward movement. Traders will be closely watching the September low of $27.75 as a critical support level, while resistance is anticipated near the 50-day EMA around $31.00.
