HG MARKETS:

The silver market (XAG/USD) is currently experiencing a minor technical correction, retreating to approximately $56.70, as market participants realize profits following the asset’s recent attainment of a record price peak. This price consolidation is occurring despite a powerful confluence of favorable fundamental forces that are expected to provide a robust floor against significant decline.

Specifically, the near-term volatility is counterbalanced by near-certain expectations of an imminent monetary easing cycle by the U.S. Federal Reserve. The market has already fully discounted a 25basis point reduction in the Fed’s December policy rate, a move reinforced by continued labor market deceleration and recent dovish official statements. This lower-rate environment structurally supports silver by reducing the opportunity cost of holding the non-yielding metal. Simultaneously, the supply side of the equation remains critically tight; the white metal continues to be sustained by acute global supply pressures, underscored by silver inventories in Shanghai reaching their lowest level in over ten years, following the significant inventory draw in the London market last month.

Therefore, the present decline is characterized as a transient profit-taking episode within a long-term bullish price regime, driven by monetary policy shifts and systemic supply deficits.

The silver price is currently undergoing a minor technical correction, retreating to the $56.70 range, as market participants strategically liquidate positions to secure profits following the attainment of a record high in the prior session. This temporary downward movement is, however, expected to be contained due to powerful structural support from two main fundamental pillars.

Firstly, the outlook is buoyed by near-unanimous market confidence in an impending monetary policy pivot by the U.S. Federal Reserve, with a 25basis point rate reduction at the December meeting being essentially fully priced in. This expected easing is critical as it reduces the opportunity cost of holding non-yielding precious metals, bolstering silver’s appeal. Secondly, the market is sustained by acute, well-documented global supply deficits, evidenced by silver inventories on the Shanghai Futures Exchange falling to their lowest levels in over a decade, a systemic constraint that aggressively caps the potential for a sustained decline.

In essence, the decline is classified as a transient episode of profit-taking following an anomalous price spike, occurring within a strongly bullish fundamental landscape defined by anticipated Fed easing and critical supply-side pressures.