- Silver price surges above $31.50 driven by strong Fed dovish expectations.
- A potential ceasefire between Russia and Ukraine may reduce safe-haven demand for silver.
- Investors are awaiting the annual China Central Economic Work Conference for further insights.
Silver price climbs above $31.50 at the start of the week, gaining momentum as market participants grow increasingly confident that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the upcoming policy meeting on December 18.
The CME FedWatch tool shows an 87% probability for a 25 bps rate cut in December, up from 62% a week ago. Historically, such cuts weigh on the US Dollar (USD) and bond yields, but benefit non-yielding assets like silver by reducing the opportunity cost of holding them.
The US Dollar Index (DXY), which tracks the Greenback’s performance against six major currencies, retreats after failing to hold above the 106.00 level. Meanwhile, 10-year US Treasury yields rise slightly to around 4.16%.
On the geopolitical front, US President-elect Donald Trump’s efforts for a ceasefire between Russia and Ukraine could diminish safe-haven demand for silver. Trump mentioned on social media that Ukraine’s President Zelenskyy is eager to make a deal, potentially easing tensions. Increased geopolitical uncertainty typically boosts demand for precious metals, including silver.
This week, market attention will turn to the closed-door China Central Economic Work Conference, held on December 11-12. The meeting will set priorities for the coming year and evaluate the current economic situation, influencing silver prices due to its use across various industries.
Silver Technical Analysis
Silver prices rise to near $31.60 after breaking through the three-day resistance at $31.30. The metal trades above both the 20- and 50-day Exponential Moving Averages (EMAs) at $31.10 and $31.20, respectively, signaling a strong uptrend.
The 14-day Relative Strength Index (RSI) is approaching 60.00, and bullish momentum could trigger a breakout above this level.
On the downside, key support is at the upward-sloping trendline near $29.50, drawn from the February 29 low of $22.30. On the upside, resistance is located around $32.50, the horizontal level from the May 21 high.
Sliver daily chart
