- Silver prices decline as Trump’s victory is seen boosting US growth and consumer spending.
- The US Dollar strengthens on expectations that the Federal Reserve may adopt a slower pace of policy easing.
- Market consensus anticipates the Fed will cut interest rates by 25 basis points in December.
Silver prices (XAG/USD) continue to slide, falling to around $30.20 during Tuesday’s European session. The white metal is under pressure as the US Dollar strengthens, bolstered by expectations that President-elect Donald Trump’s policies will drive US economic growth and inflationary pressures.
The US Dollar Index (DXY), which measures the Greenback against six major currencies, is approaching key resistance at 106.00. A stronger US Dollar makes silver more expensive for investors. Meanwhile, 10-year US Treasury yields have risen to near 4.37%, making interest-bearing assets more attractive and reducing the opportunity cost of holding non-yielding assets like silver.
Trump's pledges to raise import tariffs by 10% and lower corporate taxes are expected to increase domestic demand, boost labor markets, and encourage business investment. These policies could contribute to higher inflation, which would support the Federal Reserve's gradual approach to rate cuts.
Market expectations suggest a 65% probability that the Fed will reduce interest rates by 25 basis points to 4.25%-4.50% in its December meeting, according to the CME FedWatch tool.
Investors are now looking ahead to Wednesday’s US Consumer Price Index (CPI) data for October, which could offer fresh insights into the Fed’s rate path. Additionally, several Fed officials, including Chair Jerome Powell, are scheduled to speak this week.
Beyond the US Dollar’s strength, silver is also facing headwinds from the lack of direct stimulus in China’s recent economic package. As silver is heavily used in industries like renewable energy and mining, weak growth in China, a major consumer of the metal, is weighing on its price.
Silver Technical Analysis
Silver is trending lower toward an upward-sloping trendline near $29.00, drawn from the February 28 low of $22.30. The recent breakdown below the horizontal support level at $32.50, established from the May 21 high, signals further weakness.
The near-term trend for silver remains bearish as the 20-day Exponential Moving Average (EMA) begins to decline, now around $30.26.
The 14-day Relative Strength Index (RSI) has also dipped below 40, suggesting growing bearish momentum. If the RSI stays below this level, the downside pressure on silver is likely to intensify.
Sliver daily chart
