The long-standing gap between supply and demand for became clear in the second half of the year, especially in the current quarter. The price of the metal has stayed confidently above $60 an ounce and looks set to reach the next key level later this year.
A major factor pushing buyers is the possibility of another interest rate cut by the Fed due to a weakening labor market. Falling yields on US bonds and a relatively weaker US dollar are also creating conditions that could keep silver prices moving higher.
Today, we will see new data on , which suggests that year-on-year inflation may tick slightly above the 3% mark.
Will the Fed Keep Rates Steady Next Year?
Looking at the latest inflation data, which shows a steady rebound, one might question the case for . However, the Federal Reserve has a dual mandate: it focuses not only on price stability but also on the health of the labor market. Recent data, including revisions to previous figures, make it clear that labor conditions are worsening, as reflected by the highest unemployment rate in several years.
The current forecast is for two more 25-basis-point rate cuts next year, which may be seen as a minimum given the ongoing weakness in economic data. The market currently assigns less than a 73% probability to no change at the first Fed meeting next year.
Today, new CPI data will be released. With the market consensus at 3.1% year-on-year, the actual figure will indicate whether the recent rebound in price growth continues.
Are 2-Year Bonds on the Verge of a Support Break?
Since September, US 2-year government bond yields have mostly moved within a consolidation range. However, the lower boundary, a key long-term support around 3.45%, is facing consistent downward pressure.
If the anticipated breakout happens, the next technical targets drop below $3. If the breakout fails, a move above the main downward trend line could drive yields toward the 4.10 resistance level.
Is the Silver Pullback a Buying Opportunity?
Strong demand is preventing the market from retreating to more favorable prices, so any pullbacks are mostly sideways consolidations. If this momentum carries toward $70 an ounce, traders may look at the trend line and local support near $65 as potential entry points for long positions.
A decline below current levels could set the stage for a wider rebound, with the next target near $60 an ounce.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.