Silver’s price has been on a recovery path, inching closer to the $29.90 mark in the Monday European session. This upward movement comes despite the rise in US bond yields, as Federal Reserve officials have signaled fewer interest rate cuts for 2025. The release of the US Personal Consumption Expenditure Price Index (PCE) data for November, which showed a slower-than-expected growth in price pressures, led to a strong rebound in the white metal on Friday from a three-month low of $28.75.
Core PCE inflation, the Fed’s favored inflation measure, increased steadily by 2.8%, yet below the estimated 2.9%. The monthly headline and core PCE inflation saw only a marginal 0.1% growth, casting doubt on whether the Fed will adhere to the projected shallow rate-cut path for 2025 as indicated in the December policy meeting’s dot plot.
Even with the recent Fed dot plot suggesting that officials anticipate Federal Fund rates to reach 3.9% by the end of 2025, silver prices advanced on Monday. This occurred while 10-year US Treasury yields climbed to near 4.54%. Typically, higher yields on interest-bearing assets pose a challenge to non-yielding assets like silver, due to increased opportunity costs. The US Dollar Index (DXY), which monitors the dollar’s value against six major currencies, also edged up to near 108.00.
On Friday, several Fed officials advocated for a cautious policy-easing approach, considering the slowdown in the disinflation trend, better-than-expected labor market conditions, and the uncertainty surrounding President-elect Donald Trump’s incoming policies.
In terms of technical analysis, silver prices are now testing the breakdown of the upward-sloping trendline close to $30.00, which was drawn from the February 29 low of $22.30 on a daily chart. The metal is fluctuating around the 200-day Exponential Moving Average (EMA), indicating an uncertain long-term outlook. The 14-day Relative Strength Index (RSI) has rebounded to near 40.00, and a new bearish trend could emerge if it fails to surpass this level. Looking ahead, the September low of $27.75 serves as a crucial support level for silver prices, while the 50-day EMA around $30.90 presents a significant resistance.
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