HG MARKETS:

Silver (XAG/USD) has been experiencing downward pressure for the third straight day, trading around $33.50 on Friday. This decline is primarily driven by a stronger U.S. dollar and rising Treasury yields. Recent positive economic indicators from the U.S., including a drop in unemployment claims and strong growth in the private sector as reflected in the S&P PMI, have added to this downward trend.

Expectations surrounding the Federal Reserve’s interest rate cuts are also influencing silver prices. Economic reports released Thursday highlighted a robust U.S. economy, indicating a significant decrease in unemployment claims and a rise in private sector activity. This strength in the labor market reduces the likelihood of aggressive rate cuts by the Fed. According to the CME FedWatch Tool, there’s a 97% chance of a modest 25-basis-point cut in November, with little expectation for a more substantial 50-basis-point reduction. A financial strategist noted that given the positive economic data, the Fed is likely to adopt a more cautious stance, which is contributing to the strengthening dollar and further pressuring silver prices.

Despite these challenges, silver might still find some support due to ongoing geopolitical uncertainties and the upcoming U.S. presidential election. These factors, along with tensions in the Middle East, are pushing some investors toward safe-haven assets like silver. While the economic data currently favors a stronger dollar, the uncertainties related to the election and geopolitical risks could drive increased demand for silver. Traders are keeping a close eye on these developments, as the metal’s safe-haven status could mitigate some of the downward pressure.

In summary, while silver is facing immediate challenges due to a strong dollar, its safe-haven appeal remains relevant amidst economic and geopolitical uncertainties, resulting in a mixed outlook for the metal. Currently priced around $33.50, silver is struggling to maintain its position above the pivot point at $33.81, which serves as a critical resistance level. If it breaks above this level, it could potentially push towards $34.27 and $34.55. However, a strong double-bottom pattern is forming near the support level of $33.35, which may provide temporary stability. Technical indicators, including the 50-day EMA at $33.83 and the 200-day EMA at $33.14, suggest caution. Should the price dip below $33.38, silver could test further support levels at $33.14 and $32.88, reinforcing the bearish trend.