Silver prices fell below the $31 mark on Tuesday, currently trading around $30.95, continuing to weaken due to the strengthening of the dollar. The market anticipates that President-elect Trump will introduce policies favorable to U.S. economic growth, which may lead to inflation pressures, further boosting the dollar and suppressing silver demand. The dollar index is currently close to the critical resistance level of 106.00, increasing the holding cost of silver. Additionally, the yield on the 10-year U.S. Treasury rose to 4.37%, with higher yields increasing the opportunity cost of holding non-yielding assets like silver, reducing its attractiveness.
Trump has promised during his campaign to raise import tariffs by 10% and lower corporate taxes. The market expects this will increase demand for American goods, boost the labor market and business investment, invoke inflation pressures, and allow the Fed to adopt a gradual rate-cutting policy. The probability of a 25-basis-point rate cut at the Fed's December meeting to a range of 4.25%-4.50% is about 65%. Investors are also closely watching the release of October CPI data on November 13 and speeches by Fed Chair Powell and other officials this week, which may provide crucial interest rate guidance.
Technically, after breaking below the May 21 high support level of $32.49, silver prices are trending weaker, with the 20-day moving average beginning to fall to $32.68, indicating a weakening momentum for a silver rebound. Silver's 14-day relative strength index (RSI) has fallen below 40, and if the RSI remains below this level, it may further trigger bearish sentiment. Investors are closely monitoring changes in the RSI to confirm the downward trend in silver.
