Silver (XAG) Daily Forecast: Technical Setup Suggests $31 Support —Key Levels in Focus

Market Overview

Silver (XAG/USD) extended its bearish trend on Tuesday, falling below $32.00 per ounce during the Asian trading session. This decline was primarily driven by a surge in U.S. bond yields, with the yield on 10-year Treasury notes surpassing 4% for the first time in two months.

Rising yields make interest-bearing investments more attractive, increasing the opportunity cost of holding non-yielding assets like silver.

“The climb in U.S. Treasury yields has created a challenging environment for silver, making it less appealing to investors,” said a commodities analyst at a leading investment firm. The U.S. Dollar Index (DXY) also remained strong near 102.50, adding further pressure to the precious metal.

Fed Rate Cut Expectations Shift Amid Strong Employment Data

Market expectations for a significant 50 basis point interest rate cut by the Federal Reserve in November have significantly decreased following robust U.S. employment data for September.

With 336,000 jobs added last month, the report indicated strong labor demand and wage growth, prompting traders to reduce their bets on aggressive rate easing. Instead, market participants now see an 85% probability of a more modest 25 basis point rate cut.

“The recent labor market data has led to a repricing of interest rate expectations, reducing fears of a severe economic slowdown,” noted a senior economist. As a result, silver prices are facing added headwinds from a strengthening U.S. dollar and diminished hopes for deeper rate cuts.

Domestic Demand in India Provides Temporary Support

Despite the global bearish sentiment, silver prices have found some support in domestic markets, particularly in India, where demand has risen ahead of the festival season.

Stockists and consumers have increased their purchases amid the ongoing Navratri celebrations, stabilizing prices in the region.

Looking ahead, traders will closely watch the upcoming U.S. Consumer Price Index (CPI) data for September, set to be released on Thursday. Economists are forecasting core CPI to hold steady at 3.2%. This data could significantly influence the Federal Reserve’s future policy direction and, consequently, silver’s price trajectory.

In conclusion, while rising U.S. bond yields and a robust dollar continue to weigh on silver, increased demand in India and potential safe-haven buying amid geopolitical tensions may offer some relief.

Short-Term Forecast

Silver faces strong resistance at $31.63 while support holds at $30.88. A break below $31 may trigger additional selling pressure in the near term.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver prices are currently hovering around $31.44, down 0.75% on the day, reflecting a cautious market mood. On the 4-hour chart, the metal faces immediate resistance at $31.63, with the next key levels at $31.91 and $32.28.

The 50-day EMA sits at $31.77, acting as a strong ceiling, while the 200-day EMA at $31.19 is holding as a pivot point. Immediate support is seen at $30.88, with potential downside targets at $30.65 and $30.36 if bearish momentum picks up.

A move above $31 could signal a bullish turn, but breaking below this level might lead to more selling pressure.