Silver price drops to 9-day low below $29.80 ahead of FOMC meeting
Silver struggles to hold $30 amid dollar strength and rising yields.
Silver prices are struggling to maintain their uptrend in January 2025, breaking below critical levels in recent trading sessions.
The metal’s decline was compounded by a strengthening U.S. dollar, buoyed by inflation concerns and rising U.S. Treasury yields.
On Monday, silver broke out of its ascending price pattern, falling to a nine-day low below $29.80. Although the metal briefly recovered to $30.25, Tuesday's Asian session saw a renewed decline, bringing prices back below $30. During the European session, silver hovered around $29.90, testing the critical $29.80 support once again.
Silver price dynamics (December 2024-January 2025). Source: TradingView.
The recent weakness in silver is tied to mixed fundamental cues from the U.S. economy. U.S. President Donald Trump's tariff threats have reignited inflation concerns, which triggered a modest recovery in U.S. Treasury bond yields. This recovery supported the U.S. dollar, which rebounded sharply from a one-month low, further weighing on silver prices.
Silver price projection hinges on central bank outlook
Adding to the market caution, traders are now positioning defensively ahead of the Federal Reserve's two-day Federal Open Market Committee (FOMC) policy meeting starting during the North session today. The central bank's outlook on interest rates and inflation could play a decisive role in shaping silver's next move.
Technically, the Relative Strength Index (RSI) on the daily and four-hour charts is firmly in bearish territory, reflecting mounting selling pressure. Hence, Silver’s near-term outlook remains bearish unless it can reclaim the $30 level and sustain momentum above the 100-day EMA at $30.40. However, a break below $29.80 could open the path for further declines, potentially accelerating selling pressure in the market. Traders will look to the FOMC meeting and broader macroeconomic developments for fresh cues.
The Fed’s decision to pause rate cuts reduced silver's appeal as a non-interest-bearing asset.As a result, silver retreated below $30 per ounce, signaling potential bearish momentum.
