Silver Rally Pauses

Following a strong rally over recent weeks, silver prices have stalled for now into a test of the 32.5698 level highs. The market has been well-supported via the breakout moves we’ve seen in gold as traders react to the shifting Fed landscape. On the back of the Fed’s half-point cut this month, the market is now expecting at least a further .5% of easing ahead of year end. Pricing for a deeper .5% November cut was seen falling back below the 50% mark yesterday as weekly unemployment claims improved and durable goods came in above forecasts also.

US Inflation Data Due

Looking ahead today, focus will be on the latest US core PCE data. The index is expected to remain unchanged at 0.2% month-on-month. However, if see any undershooting of this forecast, this could see pricing for a .5% cut jumping higher again, leading USD lower and silver higher.

Fed Comments & US Data

Comments from Fed policymakers yesterday were mixed, with some citing support for continued aggressive easing and other urging caution and restraint. As such, the focus remains on incoming data. Powell signalled at the FOMC that there is no clear-cut path for policy, with the Fed to adjust rates as necessary, putting the focus on incoming data ahead of the next decision. Weak data will therefore bolster easing expectations, leading USD lower and metals higher, while stronger data will dilute easing expectations, leading USD higher and metals lower.

Technical Views

Silver

The rally in silver futures has stalled for now into the 32.5698 level. Price remains above the 31.5424 level for now and while above here focus is on a further push higher towards 33.4874 next. Below here, however, price is vulnerable to a correction towards the 28.6181 level, with a retest of the broken bear channel highs ahead of that.