Silver Strengthens Amid US Dollar Pressure, How Come?
Global silver prices have the potential to trend upward today, amid pressure from a strengthening US dollar and changing market expectations regarding the Fed's interest rate policy. Market participants have begun to reduce expectations of an interest rate cut at the December meeting, after several Fed officials struck a more cautious tone regarding the need for policy easing. As the chances of an interest rate cut narrow, yields on interest-bearing assets become relatively more attractive, and precious metals like silver are under pressure.
On the other hand, silver is not only viewed as a precious metal but also serves a dual function: as a safe haven and as an industrial metal used in solar panels, electronics, and the automotive sector. Concerns about the health of the global economy and the uncertainty surrounding the direction of US economic data following the prolonged shutdown continue to keep some investors holding positions in silver as a portfolio hedge. This has the potential to limit further declines, especially if data or news emerges that worsen risk sentiment.
The market is now awaiting a series of delayed US economic data releases, particularly the jobs report and the latest clues about the Fed's policy direction. This data will be crucial in determining whether the US dollar will continue its strengthening or reverse its weakening. For silver, the results could be crucial: if the dollar remains strong, silver's upside potential will be limited. However, if the data weakens and rekindles expectations of interest rate cuts, silver has the potential to rebound and resume its medium-term uptrend. The market is left wondering whether today's session will be a "final squeeze" phase before a new rally, or the beginning of a longer correction for silver.
Source: Newsmaker.id
