Silver price forecast: metal dips 3% as safe-haven demand fades
Silver prices climb 3.61% to $31.35, face volatility amid geopolitical tensions
Silver prices have experienced a volatile stretch, climbing 3.61% last week to $31.35 despite a strong U.S. dollar and elevated Treasury yields.
The metal price has now retreated by 3% early this week, slipping below $30.60 and aligning with the bearish trend since late October. This dramatic back-and-forth reflects conflicting sentiment between macroeconomic drivers, geopolitical uncertainties, and technical resistance levels. As traders weigh these factors, the metal’s direction hinges on whether it can sustain momentum above key thresholds or succumb to downside pressures.
The recent rise of silver prices was particularly striking given the challenges posed by a 13-month high in the U.S. dollar, which typically makes silver more expensive for international buyers, and elevated 10-year Treasury yields, which diminish the appeal of non-yielding assets like silver. However, these headwinds were countered by robust safe-haven demand, fueled by escalating geopolitical tensions and macroeconomic uncertainty.
Silver price outlook hinges on technical and macro factors
Silver’s resilience last week was supported by intensifying geopolitical tensions. As the Russia-Ukraine conflict escalated, investors headed toward safe-haven assets, which benefited silver alongside gold. Concurrently, macroeconomic uncertainties provided additional tailwinds. Speculation about Federal Reserve monetary easing in 2024 persisted, despite mixed U.S. economic data showing strong labour performance but weak manufacturing activity.
However, silver's bullish momentum encountered a ceiling at the $31.50 resistance, and this week’s Asian trading session revealed cracks in silver’s rally. Prices fell 3%, dipping below $30.60, as technical pressures took hold. On the 4-hour chart, bearish 50- and 100-day EMAs reinforced selling momentum, while the RSI below 50 signaled the potential for further declines.
The interplay between technical and fundamental factors suggests a critical juncture for silver prices. A consolidation between $31.50 and $30.00 appears likely, marking the third consecutive week within this range. However, failure to defend the $30 level could trigger a deeper pullback. Conversely, renewed safe-haven demand or shifts in Federal Reserve policy expectations could reignite bullish momentum, targeting the $31.50 resistance once more.
Silver surged past $31 on Friday morning as escalating geopolitical tensions in Ukraine fueled investor demand for safe-haven assets. The conflict intensified with Russia deploying an intercontinental ballistic missile for the first time.
