Silver price dips below 3-month support amid Fed hawkish 2025 guidance
Silver price dynamics (September-December 2024).
Silver prices faced significant downward pressure, witnessing a sharp 4.2% decline on December 18, driven by the Federal Reserve's cautious stance on future rate cuts.
Despite the 25 basis point rate cut announcement, the Fed's hawkish guidance for 2025 sent a clear signal that further rate cuts may not come as quickly as expected. The immediate impact was a break below the key support level of $29.65, which had held firm since late September. This shift marks a bearish turn in sentiment, casting doubt on silver's near-term prospects.
Silver price dynamics (September-December 2024). Source: TradingView.
The Fed's statement, while acknowledging progress in economic growth and the job market, highlighted that inflation remains above the central bank’s 2% target, with the unemployment rate rising slightly but staying low. Despite cutting rates by 25 basis points, the Fed reduced its expectations for 2025 rate cuts from an earlier forecast of 100 basis points to just 50 basis points. This change in outlook suggests that the monetary environment will likely remain tighter for longer, pushing investors to reassess the appeal of precious metals, including silver.
Resistance level and Fed policy outlook point to silver weakness
The $29.65 level, which had acted as strong support for silver since September, is now set to function as near-term resistance. This technical shift adds to the bearish outlook, suggesting that silver may struggle to regain upward momentum in the coming weeks. The RSI on the hourly chart is recovering from oversold conditions, which could provide a short-term bounce. However, any rally is expected to face resistance at the $29.65 mark, making it a challenging zone for bulls to reclaim.
With inflation pressures still high and the Fed’s more conservative rate cut outlook, silver could remain under pressure in the short term. Silver traders will likely watch the Fed’s next steps closely, but for now, the bearish sentiment dominates the precious metal’s price action. Its ability to reclaim $29.65 will determine whether the metal can break free from the bearish trend or if further declines are on the horizon.
Silver price tested the Fibonacci 0.786 level at $30.20, which briefly acted as key support. The RSI showed signs of divergence, indicating a potential rebound in the near term.
