Silver breaks above 100-Day EMA amid dovish global monetary policies
Silver’s breakout above $31.00 confirms strong momentum
Silver has experienced a significant uptick this week, aligning with the broader bullish trend witnessed in January 2025.
The precious metal has not only recorded consecutive higher closes but also broke through key technical levels, pointing towards further potential gains.
On Thursday, January 30th, silver prices rose above the previous week's high of $31.00 during the European trading session, marking a 7-week high. This movement was bolstered by silver's breach above the 100-day EMA at $30.50, a critical indicator for long-term trends. Now poised for its third consecutive higher close, silver has climbed 0.7% today, contributing to a year-to-date gain of 7.5%.
Silver price dynamics (December 2024-January 2025). Source: TradingView.
The bullish momentum in silver is supported by dovish signals from major central banks around the globe. The Bank of Canada has concluded its quantitative tightening and cut rates, following suit with Sweden's Riksbank. The European Central Bank is also on the cusp of reducing rates this week, while both the Reserve Bank of India and the People's Bank of China have hinted at forthcoming rate cuts. This global shift towards more accommodative monetary policy typically favors non-yielding assets like silver, as lower interest rates reduce the opportunity cost of holding such investments.
Silver price projection sees $31.50 as near-term resistance
In the United States, the Federal Reserve maintained its benchmark interest rate at 4.25%-4.50% during its January meeting, consistent with expectations after three consecutive rate cuts since September 2024, amounting to a full percentage point decrease. This steady stance from the Fed, in light of global trends, further supports the silver market, as investors look for safe-haven assets amidst uncertain economic policies.
Technical indicators remain favorable for silver; both the daily and 4-hour RSI are in bullish territory without being overbought, suggesting room for price appreciation. However, near-term resistance is noted at $31.50, which could cap silver's upward momentum. Should silver surpass this level, it might signal a stronger bullish case for the metal in the near future.
The Federal Reserve signaled fewer rate cuts for 2025, reinforcing a strong US Dollar outlook.Silver tested support at $29.8 twice but failed to break lower, trading within a tight range.
