Silver Slips for Third Straight Session
Silver prices are trading lower for the third consecutive session on Tuesday, currently within a major retracement zone between $31.81 and $32.53.
The metal has struggled to gain upward momentum, with substantial resistance at $33.21 and $33.39.
If silver fails to hold the $31.81 support level, a deeper decline could unfold, potentially testing the 50-day moving average at $30.85 and, in a more bearish scenario, the 200-day moving average at $30.51.
At 12:38 GMT, XAG/USD is trading $31.83, down $0.52 or -1.60%.
Gold’s Influence Remains Key for Silver
Gold prices are trading just below Monday’s record high of $2,956.31, with traders eyeing a potential test of the $3,000 mark. While gold’s primary uptrend remains solid, a pullback to $2,864.33 could shift momentum to the downside.
Given silver’s historical tendency to follow gold’s lead, a strong performance in gold could provide support for silver prices, whereas any weakness in gold might exacerbate silver’s recent slide.
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See all Silver forecastsTreasury Yield Sell-Off Provides Some Relief
The ongoing sell-off in U.S. Treasury yields, with the 10-year yield at 4.402% and the 2-year at 4.175%, is offering modest support to silver. Lower yields reduce the opportunity cost of holding non-yielding assets like silver, which could help cushion against further losses.
However, the strength of the U.S. dollar remains a critical factor, as a stronger dollar may weigh on silver prices by making it more expensive for international buyers.
Traders Brace for Friday’s PCE Report
The U.S. Personal Consumption Expenditures (PCE) report, due Friday, is likely to be a pivotal event for silver traders. As the Federal Reserve’s preferred inflation gauge, this data could influence expectations for future interest rate moves. Higher-than-expected inflation could lead to a more hawkish Fed stance, which may pressure silver and other non-yielding assets.
Market Forecast: Cautious Outlook for Silver
Silver’s short-term outlook remains cautious, with the market needing a break above $32.53 to generate fresh buying interest. However, strong resistance near $33.39 could limit gains.
On the downside, a breach of the $31.81 level might trigger an acceleration toward the 50-day moving average at $30.85, with a potential extension to $30.51 if bearish momentum builds.
Traders should closely monitor gold’s performance, the U.S. dollar’s movements, and Friday’s PCE report for cues on silver’s next direction.
More Information in our Economic Calendar.