silver prices have faced significant downward pressure, falling near $30.50 after encountering resistance at $31.00. This decline coincides with a robust recovery in the US Dollar, which has been on an upswing despite speculation surrounding potential interest rate cuts by the Federal Reserve.
The US Dollar Index has surged by 0.4% and surpassed the 101.00 level, reflecting the Greenback’s strength against a basket of major currencies. This appreciation in the Dollar makes investments in precious metals like silver less attractive, as their price becomes more expensive in Dollar terms.
Market sentiment is divided regarding the Federal Reserve’s upcoming decisions, with investors debating the likelihood of a 25 or 50 basis point rate cut in November. The CME FedWatch tool indicates nearly equal probabilities for a reduction to a target range of 4.25%-4.50%. Nevertheless, economists predict that the federal fund rate will stabilize at around 4.4% by the end of the year, a viewpoint differing from broader market expectations of a 75-basis point cut for 2023.
Looking ahead, attention will turn to the upcoming preliminary S&P Global Purchasing Managers’ Index (PMI) data for September. The Manufacturing PMI is anticipated to rise slightly from 47.9 to 48.5, while the Services PMI is expected to show modest growth, slowing from 53.7 to 53.5. Notably, values below 50 indicate economic contraction, heightening the focus on these indicators.
In terms of technical analysis, silver is exhibiting a Rise Channel formation on the four-hour chart, with the upper boundary serving as resistance. The recent pullback to around $30.36, close to the 50-period Exponential Moving Average, indicates prevailing uncertainty in the market. The Relative Strength Index (RSI), fluctuating between 40.00 and 60.00, further signifies a potential weakening momentum, leaving investors cautious about future trends.
