Silver price dips 4% to a six-day low amid stronger dollar
Silver prices dip over 12% in four weeks, testing key support at $30.00 amid bearish market sentiment
Silver prices have entered a challenging phase dipping over 12% within the past four weeks, double gold’s 9% drop. Monday’s 4% decline pushed silver to a six-day low of $30.00, breaking key support levels.
The metal now teeters on pivotal technical thresholds, as broader market forces and geopolitical developments weigh heavily. While bearish indicators dominate the short term, strong industrial demand and potential Federal Reserve easing hint at longer-term recovery.
On Monday, Silver’s decline from $31.50, a resistance near the 50-day EMA, to the $30.00 psychological support reinforcing the market's bearish sentiment since early November with a bearish engulfing pattern. Despite these setbacks, the broader uptrend since August remains intact, with the current dip finding support at $30.00, aligning with the trendline of this larger rally.
Silver supply and demand to shape price outlook
The dollar’s strength, fueled by President-elect Donald Trump’s tariff announcements and optimism in the bond market, has significantly reduced foreign demand for dollar-denominated assets like silver. Additionally, Scott Bessent’s appointment as US Treasury Secretary brought a gradual approach to trade policies, stabilizing markets and diminishing interest in non-yielding assets.
Meanwhile, industrial and investment demand for silver remains robust. The Silver Institute projects a 1% growth in global silver demand for 2024, driven by record-breaking industrial use in solar and electronics. India’s silver imports have doubled to 4,554 metric tons, reflecting robust demand. However, increased recycling and higher mine output are expected to reduce the global silver deficit by 4%, balancing supply and limiting price surges.
While Federal Reserve officials hint at potential rate cuts, providing a supportive backdrop, the strong dollar and increasing silver supply could temper bullish momentum which may lead to a decisive break below $30.00 and a deeper correction. Conversely, resilient industrial demand may set the stage for recovery in 2024.
Silver's bullish momentum encounters a ceiling at the $31.50 resistance as Monday Asian session reveals cracks in the metal rally. Prices fell 3%, dipping below $30.60, as technical pressures took hold.
