Silver Is Losing the Midpoint Again
Spot Silver (XAGUSD) is getting hit Wednesday with the dollar and long-term Treasury yields climbing back toward their highs. It opened near the top of its range, tried to hold the long-term 50% level early and couldn’t. Once the midpoint went, there wasn’t much underneath until last Friday’s low.
This is the same rates trade that’s pressuring gold, but silver is taking the harder hit. The dollar is pushing higher again, the 10-year is back near its highest level since 2002 and the Fed minutes and a big Treasury auction are still ahead.
At 13:03 GMT, spot silver is trading at $59.77, down $1.58 or -2.58%. It opened at $61.43, reached $61.50 and bottomed at $58.99.
The Long End Is Running the Trade
The 10-year Treasury yield hit 5.350% early Wednesday and was sitting at 5.345%, just under Monday’s high, the highest since 2002.
It’s up about 60 basis points since the end of July. That’s not an October rate-hike panic. The two-year is still well under last week’s high after the weak September payrolls report cooled the front end.
The selling is in long-dated paper. Inflation, government borrowing and the premium investors want for tying money up in long bonds are all still pushing yields up.
Oil isn’t helping. Brent is back above $100 a barrel with a Gulf of Mexico storm and fresh attacks around Middle East energy infrastructure. That keeps feeding the inflation worry behind those yields.
Wednesday’s $39 billion 10-year note auction is the immediate test of whether anybody wants this paper at these levels. Silver is already trading as if bond sellers are still in charge.
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See all Silver forecastsThe Dollar Is Back Near Its High
The U.S. Dollar Index was trading at 102.422, up 0.57% on the session, after buyers stepped in near 101.754 Tuesday. It’s a short trip back to Monday’s 102.535 high.
The dollar is still well above its 50-day and 200-day moving averages. Tuesday’s dip didn’t break anything. Wednesday has the currency back in control.
Silver got one shot at a recovery when the dollar backed off Tuesday. It didn’t keep it. Losing the midpoint Wednesday says the dollar’s rebound mattered more than Tuesday’s dip in rates.
Fed Minutes Are the Next Risk
The Federal Reserve releases minutes from its September meeting at 18:00 GMT. That’s the meeting where officials raised rates 25 basis points, their first hike since 2023.
October looks settled. FedWatch has 78.4% on a hold at the October 28 meeting against 21.6% for another quarter-point hike.
December is where silver gets hurt. The market is pricing an 84.7% probability of at least one more rate increase by the December 9 meeting.
Traders are combing the minutes for any sign officials are uneasy about how far long-term yields have run.
Christopher Waller, Neel Kashkari and Alberto Musalem are scheduled to speak later Wednesday. Any of them can add to the rate-hike trade.
Daily Spot Silver (XAGUSD) Technical Analysis
Spot silver is trading sharply lower Wednesday after failing to hold the long-term 50% level at $60.835. The main trend is down according to the daily swing chart.
The move through last Friday’s low at $59.69 signals a resumption of the downtrend. A trade through the main top at $67.55 will change the main trend to up.
The minor trend is down. A trade through the minor top at $62.09 will turn the minor trend up.
The first resistance is the short-term retracement zone at $61.04 to $62.98. Silver failed inside the lower half of this area early Wednesday. Taking out $62.09 would put the upper boundary at $62.98 in play, followed by the 50-day moving average at $64.21.
The break below $59.69 leaves the swing bottoms at $56.56 and $54.78 as the next downside targets. The long-term value area remains $60.835 to $46.48.
What to Watch
The 10-year auction and the Fed minutes are what silver has to get through Wednesday. The dollar is back near its high and the 10-year is back near its 2002 peak, so sellers aren’t waiting on a new reason.
My read is the auction matters more than the minutes for silver today. Minutes look backward.
The auction shows in real time what it costs to clear a 10-year sale with yields already at 2002 levels. That’s the price silver has been trading against since the end of July. Oil running hot doesn’t make that sale any easier. The dollar has a short walk back to Monday’s high. Silver’s been the weaker metal Wednesday, and it goes into the afternoon without a single piece of the financial trade on its side.
Spot silver lost $60.835 early Wednesday, then took out Friday’s $59.69 low on the way to $58.99. The bias is to the downside while the main trend is down, silver remains below the midpoint and the market trades under the 50-day moving average. The next swing bottom underneath is $56.56, with the minor top at $62.09 well overhead.
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