Silver (XAG/USD) has rebounded on Thursday, recovering from a nearly 6% drop the previous day. The uptick follows a retreat in global equities amid concerns over AI investments, which has pushed investors toward government bonds and lowered US Treasury yields. The US Dollar (USD) has also weakened, supporting the rally in silver, which is trading around $570.05, up 2.54% on the day.
Despite the recovery, silver faces challenges from expectations of further Federal Reserve (Fed) rate hikes. Hotter-than-expected US CPI and PPI reports have raised the likelihood of higher interest rates, increasing the opportunity cost of holding non-yielding silver. The CME FedWatch Tool indicates a 90% chance of a rate hike by December, though rates are expected to remain unchanged at the October 27-28 meeting.
Technical analysis shows silver trading well below key moving averages, with the 50-day, 100-day, and 200-day SMAs clustered between $64 and $72. The MACD remains negative, while the RSI near 36 suggests oversold conditions. Initial resistance levels are identified at $58.27, $60.04, and $61.47, with stronger barriers near $62.91 and $63.24. A break below $55 could lead to further declines, while holding support may encourage a corrective bounce.
Silver's price movements are influenced by its safe-haven status, industrial demand, and the behavior of the US Dollar. As a yieldless asset, it tends to rise with lower interest rates and a weaker Dollar. The metal is widely used in electronics and solar energy, with demand dynamics in the US, China, and India also playing significant roles.