Silver prices are holding steady at around $49.00. Traders are lowering their expectations for a Federal Reserve rate cut this year. According to the CME FedWatch tool, the chance of a December rate cut has dropped from 91.1% to 72.8%. Fed Chair Jerome Powell has remarked that a December cut isn’t guaranteed, which impacts non-yielding assets like silver. Improving US-China trade relations have decreased demand for silver as a safe-haven asset. President Donald Trump announced that China would export rare earths to the US without restrictions, cooperate on fentanyl issues, and increase agricultural trade. These developments lessen silver’s appeal as a safe investment.

Technical Analysis Of Silver

Silver is trading near $49.00 but is having trouble staying above the 20-day Exponential Moving Average of $48.55. The 14-day Relative Strength Index is below 60.00, indicating that bullish momentum is slowing down. Support is strong at the September 23 high of $44.47, while resistance stands at the all-time high of $54.50. Silver is traditionally valued for its role as a store of value, a way to diversify investment portfolios, and as a hedge against inflation. Factors driving silver prices include geopolitical tensions, interest rates, the strength of the US Dollar, investment demand, and industrial usage, especially in electronics and solar energy. Silver usually follows gold prices, and the Gold/Silver ratio helps show their relative value. The market is pulling back its expectations for a Federal Reserve rate cut in December, with chances dropping from over 90% to around 72% in just a week. This change follows Chairman Powell’s cautious remarks. Upcoming speeches from Fed officials will be important for market direction. A more hawkish stance could pressure non-yielding assets like silver.

Market Strategies For Rising Volatility

With this uncertainty, implied volatility in silver options is likely to increase as the Fed speeches approach. Traders might consider strategies like long straddles or strangles to take advantage of potential price swings in either direction, without betting on a specific outcome. This method allows them to capitalize on price movements, which seem more predictable than the direction itself. From a technical perspective, silver’s price struggles to stay above the 20-day moving average, which could signal that recent bullish momentum is fading. The RSI dropping below 60 reflects this loss, suggesting a possible period of consolidation or pullback. Caution is advised for aggressive new long positions until there’s a clear upward break. It’s worth remembering that silver traded near these levels back in 2011 and experienced a sharp correction afterward. With prices close to $49.00, we’re near the historical peak of about $54.50, a level that serves as major psychological resistance. Taking some profits on existing long positions might be a wise risk management strategy. On the positive side, the long-term demand for silver in industrial uses remains strong. The solar and electric vehicle sectors are expanding in 2025, with global solar installations expected to reach record highs this year. This ongoing demand creates a solid base for silver prices, suggesting that any major dip could be seen as a buying opportunity. Additionally, it’s important to consider the gold/silver ratio, which is currently around 50. This is below the historical average of the last 20 years, indicating that silver may be overvalued compared to gold. This could lead some traders to shift from silver to gold, seeing more potential for gold. For those holding long positions, buying put options can be an effective way to protect against a downturn without selling the asset. This defines your risk if Fed officials adopt a more hawkish stance in the coming weeks, allowing you to participate in further price increases while also having a safety net for potential losses. Create your live VT Markets account and start trading now.

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