Silver price posts 3% gain amid resistance indicators
Silver price surges 3% to $30.96 amid dovish Fed signals and geopolitical tensions
As of the latest trading data, silver is trading at $30.96 per ounce, recovering with a 3% gain from a recent low near the psychological $30.00 mark.
However, the metal faces a critical resistance zone ahead, including the 50-day EMA at $31.15 and the 0.786 Fibonacci level, suggesting potential price pullbacks in the near term.
Silver price dynamics (September-December 2024). Source: TradingView.
The current bullish momentum for silver is largely driven by shifting market expectations regarding U.S. interest rates. Following dovish remarks from a Federal Reserve official, traders have increased their bets on a 25 basis point rate cut at the Fed's December meeting. Market expectations have jumped to a 75% chance of a rate reduction, compared to just 59% a week ago. This has spurred demand for silver and other precious metals, as lower interest rates generally reduce the opportunity cost of holding non-yielding assets like silver.
Geopolitics and China stimulus add to Silver outlook
Geopolitical tensions in the Middle East also play a role in the silver's rally. The ongoing conflict between Israel and Hezbollah has led to a flight to safety, boosting the demand for precious metals. Additionally, speculation that China might announce more stimulus measures at upcoming political meetings has further fueled positive sentiment toward silver. As the world's largest consumer of metals, any boost to China's economic outlook strengthens the demand for commodities like silver.
Looking ahead, silver is expected to trade at $31.22 by the end of the current quarter, according to analysts' expectations, with estimates placing silver at $33.69 per ounce. However, technical indicators show silver may face some short-term pressure due to its overbought condition, as the intraday RSI is above the 70 mark. This suggests that a price correction could occur if resistance levels hold firm. Hence, key levels to watch are $31.15 and $31.22. A break above these could trigger further gains, while a retreat towards $30.00 remains possible if resistance proves too strong.
Silver is weighed down by technical barriers and the strength of the US dollar. Despite slight improvements in Chinese manufacturing, silver price remains below 100-day EMA.
