Silver (XAG) Forecast: Will Fed Uncertainty Keep Silver Below 50-Day MA?

Why Is Silver Under Pressure Today?

Silver prices are experiencing downward pressure as the U.S. dollar shows renewed strength during the Thanksgiving holiday period. The dollar index has moved up to 106.30, recovering from a recent two-week low of 105.85 after its steepest four-month decline. This dollar strength creates direct bearish pressure on silver prices, as a stronger dollar makes commodities more expensive for international buyers, typically reducing demand.

What Are The Latest Economic Signals?

Recent Core Personal Consumption Expenditures (PCE) data reveals persistent inflation challenges, forcing markets to reassess their expectations for Federal Reserve policy in 2024. The Fed’s ongoing battle to reach its 2% inflation target, combined with potential trade policy shifts, is creating a complex environment for rate cut decisions. Higher interest rates typically pressure silver prices by increasing the opportunity cost of holding non-yielding assets.

How Are Traders Positioning During The Holiday?

Market participants now price in a 64.7% probability of a quarter-point rate cut in December, according to CME Group’s FedWatch tool. This reflects growing uncertainty about the pace of monetary policy easing, while trading volumes remain light during the U.S. Thanksgiving holiday closure. The reduced probability of rate cuts creates a bearish scenario for silver, as markets had previously priced in more aggressive easing.

Could Trade Tensions Impact Silver Prices?

Mexican President Claudia Sheinbaum’s warning about potential retaliatory measures against proposed 25% U.S. tariffs introduces new trade war concerns. This development could create a bullish catalyst for silver prices, as the metal traditionally benefits during periods of geopolitical tension and trade disputes. Historical data shows silver typically gains 8-12% during significant trade conflicts.

Where Are The Key Technical Levels?

The silver price chart shows a clear downward trend from the recent high of 34.87, with current prices testing support around the 30.09 level. The metal has broken below the 50-day moving average at $31.77, suggesting increased selling pressure in the near term. This technical breakdown could trigger systematic selling from trend-following traders.

What’s The Trading Outlook?

The short-term outlook for silver appears bearish, with technical indicators suggesting further downside potential over the next two weeks. However, the long-term bullish trend remains intact, supported by safe-haven demand and monetary policy uncertainty.

Traders should watch the 29.68 support level, as a break below could accelerate selling pressure, while any dollar weakness could prompt a recovery toward the 32.27 resistance zone. The risk-reward ratio favors short positions with tight stops above the 50-day moving average.

More Information in our Economic Calendar.