Harvest Global Markets :

Silver prices surged on Tuesday, driven by a confluence of factors such as lower U.S. Treasury yields and a weakened U.S. Dollar. The decline in yields has enhanced the appeal of non-yielding silver, while a softer dollar has increased demand among foreign investors. The U.S. dollar reached a more than 2-1/2-month low, making dollar-denominated silver more attractive to holders of other currencies.

Investor focus is now on the minutes from the Federal Reserve’s recent meeting, seeking clues about future interest rate movements. Recent economic data, including lower-than-expected producer and consumer price indices, suggests that inflation is moderating, leading to speculation that the Fed’s cycle of interest rate hikes might be coming to an end.

Market expectations are centered on the upcoming release of the Fed’s meeting minutes, with a prevailing sentiment that the Fed will maintain rates in their December meeting. There’s also a growing anticipation of a rate cut by May 2024, with over a 50% likelihood according to CME’s FedWatch Tool. Lower interest rates typically make silver more appealing as an investment by reducing the opportunity cost of holding it.

Looking at the short-term forecast, silver prices are expected to remain strong, supported by the prospect of U.S. interest rate cuts, a continuing weaker dollar, and ongoing geopolitical tensions. The closure of the bond markets on Thursday for Thanksgiving and the release of the Fed’s meeting minutes are seen as pivotal events that could influence market direction.

From a technical analysis perspective, silver is currently trading at 23.63, positioned above both the 200-day moving average (23.30) and the 50-day moving average (22.71), indicating a bullish trend. The current price is situated between minor support at 23.55 and minor resistance at 24.50, suggesting the potential for an upswing, though caution is advised due to the tight range between these levels. Attention should be given to the downtrend line at 23.91, as a decisive breach of this level could trigger an acceleration to the upside.