Silver prices (XAG/USD) climbed 1.5% to $23.80,Trump bitcoin marking the highest level since early September
Disappointing US economic reports triggered a dollar selloff and Treasury yield decline
Technical indicators show strong bullish momentum for silver
The silver market witnessed substantial buying interest during Thursday's trading session, with XAG/USD climbing above key resistance levels to reach $23.80 per ounce. This upward movement coincided with weaker-than-expected US economic indicators that prompted investors to reassess Federal Reserve policy expectations.
Recent economic data revealed concerning trends in the US labor market and manufacturing sector. Weekly jobless claims jumped to 231,000, significantly higher than the 220,000 forecast and marking the highest reading in three months. Simultaneously, October's industrial production figures showed a 0.6% monthly contraction, doubling analysts' pessimistic projections.
These economic headwinds immediately impacted Treasury markets, with yields across the curve experiencing notable declines. The 2-year Treasury note yield fell to 4.83%, while longer-dated securities saw even steeper drops. This yield compression reduces the opportunity cost of holding non-interest-bearing assets like silver, making the precious metal more attractive to investors.
Market participants are increasingly pricing in a more dovish Federal Reserve stance following recent economic data. The combination of cooling inflation, softening labor market conditions, and industrial weakness strengthens the case for the central bank to maintain its current pause on rate hikes. Fed officials have emphasized the need for sustained economic deceleration before considering policy adjustments.
Current market pricing suggests a 98% probability of the Fed maintaining rates in December, with growing expectations for potential rate cuts emerging in the second quarter of 2024. This shifting interest rate outlook continues to pressure the US dollar while providing tailwinds for precious metals. The dollar index (DXY) extended its recent decline, falling below key support levels.
Technical Outlook: Silver Price Analysis
From a technical perspective, silver's price action appears strongly bullish across multiple timeframes. The daily chart shows XAG/USD trading comfortably above all major moving averages, including the 20-day, 100-day, and 200-day SMAs. This configuration typically indicates sustained buying pressure and suggests the potential for further upside.
Momentum indicators reinforce this bullish thesis. The Relative Strength Index (RSI) maintains an upward trajectory above the 50 midline, while the MACD histogram continues printing higher green bars. These technical signals suggest that market participants remain confident in silver's near-term prospects.
Key support levels to monitor include $23.50, followed by the convergence zone between $23.20-$23.30 where the 100-day and 200-day moving averages currently reside. On the upside, resistance appears at $24.00, with potential targets at $24.30 and $24.50 if bullish momentum persists.
Market participants should continue monitoring US economic data releases and Fed commentary for clues about future monetary policy direction. Any signs of economic resilience could potentially reverse silver's recent gains, while further weakness would likely extend the current rally.
