Silver price retreats below $30 as RSI signals bearish breakout potential
Silver fluctuates near $30 amid Fed rate pause speculation and policy uncertainty.
Silver (XAG/USD) price is at a crossroads between critical price points and looming policy decisions that could shape its near-term trajectory.
Over the past week, silver oscillated within a range of $29.80 to $30.97 per Troy ounce, with movements centered around the 50-day Exponential Moving Average (EMA).
Today, on Monday, January 27, silver experienced significant volatility, starting with a 1% rise in the Asian session, only to fall back below its opening price. Currently, in the European session, silver trades at $29.98 per ounce as technical and economic sentiment hints at potential bearish developments.
There's widespread anticipation that the Fed will maintain current interest rates, marking a pause in the rate-cutting cycle that started in September. This decision is influenced by the uncertainty surrounding President Donald Trump's trade and immigration policies, which are seen as inflationary and could pressure the Fed to keep rates higher for longer, reducing the appeal of silver, a non-interest-bearing asset.
Geopolitical tension and RSI points to Silver bearish outlook
Moreover, the recent rebound in the U.S. Dollar (USD) adds pressure on silver. The greenback has regained strength due to renewed tariff concerns following Trump's announcement to impose tariffs and sanctions on Colombia, in response to their refusal to allow U.S. military planes carrying deported migrants. This geopolitical tension not only affects trade relations but also impacts the investment appeal of precious metals like silver.
Silver price dynamics (December 2024-January 2025). Source: TradingView.
Technically, the Relative Strength Index (RSI) on both daily and 4-hour charts have shifted to bearish territory, indicating potential for a bearish breakout from its current wedge pattern and sideways consolidation. Should this occur, the near-term support level to watch is $29.80.
Despite these challenges, silver's fundamental backdrop might still offer opportunities for a resurgence, especially if the market reacts positively to any dovish signals from the Fed or if global risk sentiment improves.
Trump's call for immediate Federal Reserve rate cuts due to falling oil prices supported bullish momentum in silver. Following his comments, silver climbed 1.5%, finding support at the 100-day EMA.
