Silver remains under pressure after facing heavy selling pressure in recent sessions, weighed down by strong U.S. economic data and concerns about a more cautious pace of easing from the Federal Reserve in 2025.
The Fed is widely expected to cut rates by 25 bps interest rate cut on Wednesday, but it may signal fewer reductions for 2025 due to concerns about a potential resurgence of inflation.
Recent remarks by Jerome Powell that highlighted lower labor market risks, but ongoing inflation have sparked hawkish cut speculation. This indicates that the Fed may indicate a pause in rate cuts in January while it assesses the labor market’s strength and the outlook for inflation, which is still above its 2% annual target.
The U.S. Dollar has strengthened because of strong economic data. In December, the Composite PMI reached a 33-month high of 56.6, while the S&P Global Flash US Services PMI surged to 58.5, its highest level in 38 months.
Despite the Manufacturing PMI dropping to 48.3, strong growth in the service sector bolsters confidence in the US economy.
The dollar has gotten stronger due to higher yields on US Treasury bonds. As rate-cut bets are weighed against expectations of higher inflation under President-elect Donald Trump’s policies, the 10-year US Treasury yield jumped to its highest level since November 22.
Silver and other metals also faced pressure from ongoing demand uncertainty in China, the world’s largest consumer of metals. Earlier this week, data showed that retail sales growth in China slowed more than expected in November, reflecting weakening consumption.
Technical Analysis
Source: TradingView
Price tried to reach resistance around 32.6 but failed to hold the rally and instead declined below the pivot point which was formed at 31.1. RSI (14-Day) shows that a bearish divergence was formed which caused the price to fall.
If bearish pressure carries on, price could continue its downtrend, with traders keeping a close eye on the 29.1 level as a potential support. If price can pull back, bulls may look to recapture ground above 31.1 and might help the price rally again.
