Silver price witnessed a drop nearly one percent on Monday as the white metal weakened due to a rise in US bond yields. The likelihood of the Federal Reserve (Fed) delivering another larger-than-usual 50 basis points (bps) interest rate cut in November has diminished, contributing to this decline.
The 10-year US Treasury yields rose slightly above 4%, which increased the opportunity cost of holding non-yielding assets like silver. Additionally, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, remained firm near 102.50.
However, silver is unlikely to turn extremely bearish amid escalating tensions between Iran and Israel. Historically, geopolitical tensions drive demand for precious metals as safe-haven assets.
Market expectations for a large Fed rate cut have faded after the US employment report for September showed strong labor demand and robust wage growth. Traders are now pricing in a 25 bps Fed interest rate cut in November, according to the CME FedWatch tool.
Upbeat labor market data has eased concerns of an economic slowdown, which had led traders to anticipate a second consecutive 50 bps rate cut in September.
Looking ahead, the next move in silver prices will be influenced by the US Consumer Price Index (CPI) data for September, set to be released on Thursday. Economists expect the core CPI, which excludes volatile food and energy prices, to have risen steadily by 3.2%.
Technical Outlook – Silver Price
Silver price turned lower from a high of 95,388 since Friday and yesterday, made a low of 91,475 and settled at 92,357, down 1.06%.
On the chart, prices are forming a rising wedge pattern which is indicating for a trend reversal in a near future. Currently, the prices are trading near a significant support level at 91,500. A break below this level could lead to a retreat towards the 90,500-89,500 range in the near future.
However, if the support holds and the break fail, prices may rebound towards 92,900-93,250.
Therefore, momentum is expected to remain in a consolidation phase unless prices break below 91,500.
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Commodity Samachar Securities
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