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Silver
Source: Newsmaker.id
Silver prices weakened again during Wednesday’s trading session (October 21), pressured by a strengthening U.S. dollar and rising U.S. Treasury yields. Spot silver (XAG/USD) fell 0.89% to $57.50 per troy ounce, extending the downward pressure on the precious metal amid growing expectations for a hawkish monetary policy from the Federal Reserve. The U.S. dollar’s recovery from a near three-week low weighed on silver, as a stronger greenback makes precious metals more expensive for investors using other currencies. Furthermore, higher Treasury yields have increased the appeal of interest-bearing assets compared to silver, which offers no yield.
Pressure on silver intensified following a roughly 1.6% surge in Brent crude oil prices, driven by uncertainty surrounding the conflict involving the United States and Iran. Diplomatic efforts—reportedly involving Pakistan—continue to face obstacles, primarily concerning Washington’s demands regarding Tehran’s nuclear program. Iran has also indicated that restrictions on activity in the Strait of Hormuz will remain in place until certain conditions are met. These tensions have heightened concerns regarding potential disruptions to global energy supplies and the risk of persistent inflation. According to the CME FedWatch Tool, market participants now estimate a nearly 90% probability of a Federal Reserve interest rate hike in December, placing further downward pressure on silver prices.
Investors are now awaiting the Federal Reserve’s monetary policy decision on October 28, as well as the release of the U.S. Personal Consumption Expenditures (PCE) price index on October 29, for further insight into the outlook for inflation and interest rates. Inflation data coming in higher than expected could strengthen expectations for monetary tightening and prolong silver’s weakness. Conversely, an easing of inflationary pressures and a decline in Treasury yields could pave the way for a recovery in prices. Nevertheless, geopolitical uncertainty in the Middle East still has the potential to support demand for silver as a safe-haven asset; consequently, the price of this precious metal is expected to remain volatile leading up to the Federal Reserve's decision.
Newsmaker’s Point of View
The decline in silver toward US$57.50 suggests that current expectations for high interest rates from the Fed are exerting a stronger influence on the market than the demand for safe-haven assets driven by the conflict in the Middle East. A surge in oil prices poses a challenge for silver, as it could keep US inflation elevated—potentially prompting the Fed to continue its monetary tightening.
From a technical perspective, the US$57 area serves as a key psychological support level for XAG/USD. Should the price break below this level, selling pressure could persist, pushing it toward the US$56–US$55 range. Conversely, if silver manages to rebound above US$58, there may be an opportunity for a recovery toward the US$59–US$60 level. These levels are provided as technical reference points rather than definitive price targets.
Newsmaker’s Conclusion: Silver remains under short-term bearish pressure due to a strengthening US dollar, high Treasury yields, and expectations of interest rate hikes by the Fed. However, the conflict in the Middle East could temper this decline by sustaining demand for safe-haven assets. The upcoming FOMC decision and PCE inflation data will likely serve as the primary catalysts, determining whether silver can stage a recovery or if it will continue its downward trend. (arl)
Source: Newsmaker.id