Silver's taking a tumble! At the time of this report, the precious metal is trading at $47.17, reflecting a decrease of $0.91 or -1.90%. This downward trend is something to watch closely.
Looking at potential rebounds, we see minor resistance levels at $49.38 and $49.46. Stronger resistance zones are between $50.02 and $51.07, corresponding to the 50% to 61.8% retracement levels of the recent upward movement. Keep an eye on the $45.79 mark; it's a key point influencing short-term price direction.
So, what's driving this silver slump? The U.S. dollar is flexing its muscles! The dollar index has surged past 100, a level not seen since early August. This strength stems from a shift in expectations about the Federal Reserve's actions. Specifically, the anticipation of a December rate cut has diminished.
Federal Reserve Chair Jerome Powell hinted that the quarter-point rate cut from last week might be the last one this year. This has caused a re-evaluation in the FedWatch futures, with the likelihood of a December cut dropping to 65% from 94% a week earlier.
This stronger dollar is putting pressure on precious metals. Gold has dipped below $4,000, and silver is following suit. The dollar, along with the yen and Swiss franc, is attracting safe-haven investments as risk sentiment wanes. This is fueled by weak manufacturing data and ongoing economic uncertainties, including the U.S. government shutdown.
But here's where it gets controversial... The lack of crucial U.S. economic data, such as the JOLTS report and October's jobs numbers, due to the government shutdown, is clouding the economic picture. Traders are now leaning on alternative indicators like the ADP private payrolls report and ISM data, which indicates continued weakness in U.S. manufacturing.
As a result, Treasury yields have slightly decreased across the board, reflecting investor caution. The 10-year yield is at 4.089%, and the 2-year yield is at 3.578%, suggesting a defensive investment strategy.
What are your thoughts on these market dynamics? Do you see the dollar's strength as a temporary phase, or a longer-term trend? Share your views in the comments below!
