Silver Is Bouncing but the Rate Trade Is Still in the Way
Spot silver is edging higher Friday, but the recovery is not getting much help from the bond market. The Dollar Index is lower, but it remains above 101. The 10-year Treasury yield bounced from Thursday’s low and is back above 5.12%.
That leaves silver inside Wednesday’s wide range for a second session. Warsh took some pressure out of the October rate trade overnight. The metal still has hotter inflation, higher long-term yields and December sitting in front of it.
At 14:13 GMT, Spot Silver (XAGUSD) is trading $57.54, up $0.13 or +0.22%.
Daily Spot Silver (XAGUSD) Technical Analysis
Spot silver is edging higher Friday, but for a second session in a row, the market is trading inside Wednesday’s wide range of $59.37 to $55.40.
The main trend is down according to the daily swing chart. A trade through $55.40 will signal a resumption of the downtrend with the July 17 main bottom at $54.78 an additional target. This level is a potential trigger point for an acceleration to the downside.
Taking out $61.46 will change the main trend to up with a main top at $62.09 the next target. This is the last swing top before the 50-day moving average at $63.99.
The minor range is $61.46 to $55.40. Trader reaction to its 50% level at $58.43 is likely to set the tone on Friday. A sustained move over $58.43 would signal the presence of counter-trend buyers. A failure to overtake $58.43 would suggest the return of short-sellers.
Wednesday’s steep sell-off reaffirmed the weakness in the market, which suggests we could be witnessing a technical bounce in an oversold market. However, a sustained move over $58.43 could flip momentum to the upside with 50% of the all-time high at $60.835 the next target. This level is the last potential resistance before the swing tops at $61.46 and $62.09.
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See all Silver forecastsDaily December Comex Silver Technical Analysis
December Comex Silver futures are higher on Friday but in a tight intraday range. The main trend is down according to the daily swing chart. A trade through $55.56 will reaffirm the downtrend. The main trend changes to up on a move through the last swing top at $61.745.
The minor range is $61.745 to $55.56. Its 50% level at $58.655 is the key level to watch. Trader reaction to the level is likely to set the near-term tone. A sustained move over it will indicate the return of buyers. If this creates enough upside momentum, traders may take a run at the swing top at $61.745. If sellers defend this price level, downside momentum created by the move could put $55.56 back in play.
Warsh Eased October Pressure
Warsh did not give the rate trade a new reason to run overnight. FedWatch now shows an 85.1% chance the Fed leaves rates unchanged at the October meeting, up from 72.3% a day earlier. The chance of a hike fell to 14.9%.
The Dollar Index backed away from this week’s 102.945 high and traded at 101.777 Friday, down 0.22%. Silver got a 13-cent bounce out of the move. Buyers did not get much more.
The 10-year yield fell to 5.039% Thursday, then came back to 5.123% Friday. The dollar let go. Yield buyers came back.
The Rate Hike Was Pushed, Not Removed
October is coming out of the rate trade. December is not.
September producer prices rose 6.3% from a year earlier, the largest annual increase since 2022. Wednesday’s CPI report showed consumer prices up 0.6% for the month and 3.7% from a year earlier.
FedWatch puts the chance of a December rate increase at 90.4%. The market assigns a 77.1% probability to a quarter-point move and a 13.3% chance of a half-point increase.
The Fed may wait this month. Silver still has to trade through the rate decision that is being pushed into December.
What to Watch
The dollar pullback gave silver a bounce, but the 10-year yield recovery kept it small. December still carries a 90.4% chance of a rate increase after the hot PPI and CPI reports. That is the part of the rate trade that has not gone away.
Spot silver remains inside Wednesday’s range with the main trend down. The move over $58.43 has to hold if counter-trend buyers are going to take control. A break under $55.40 brings the July 17 bottom at $54.78 back into play.
December Comex Silver futures are also below their midpoint at $58.655. Buyers have to recapture that level to put the $61.745 swing top back in front of the market. A failure to do that leaves the recent $55.56 low exposed.
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