Silver Falls as Fed Rate-Cut Odds Drop Amid Geopolitical Tensions
Silver prices slid as markets scaled back expectations for near-term Federal Reserve rate cuts and navigated ongoing geopolitical tensions. Strong January CPI and upbeat employment data reduced the probability of a June rate cut from roughly 68% to 42%, bolstering the U.S. dollar and raising the opportunity cost of holding non-yielding metals. Physical and market signals added to downward pressure: silver breached its 100-day moving average near $23.50, the RSI fell to 42, and global silver ETFs saw net outflows (down ~8.2 million ounces in February). Supply-side strains persist—mine output rose only 2% in 2024 while industrial demand grew about 5%, with photovoltaics and EVs driving long-term consumption growth. LBMA inventories fell ~12% since December, and options put/call ratios rose as institutions sought downside protection. Analysts are mixed: Goldman Sachs remains neutral citing robust industrial demand, while JPMorgan warns of near-term weakness; managed-money net longs have declined for weeks. Key indicators traders should watch: Fed communications and inflation prints, DXY/dollar strength, ETF flows, CFTC positioning, LBMA inventories, and technical levels (support $22.80–$23.20; resistance ~$24.40). Short-term outlook favors continued pressure from tighter Fed expectations and dollar strength; structural supply deficits and rising industrial use provide medium-to-long-term support.
Bearish
The article outlines a clear near-term bearish case for silver driven by reduced Fed rate-cut probability, stronger U.S. data, and dollar appreciation. These macro drivers increase the opportunity cost of holding non-yielding metals and have already contributed to technical deterioration (breach of 100-day MA, falling RSI) and ETF outflows—classic indicators of short-term selling pressure. Historical parallels (price declines during 2015–2018 tightening) support this reaction. However, medium-to-long-term fundamentals remain supportive: persistent structural deficits, rising industrial demand from photovoltaics and EVs, falling LBMA inventories, and limited mine growth could cap deeper declines and encourage rebounds once policy expectations shift or geopolitical risk more cleanly boosts safe-haven demand. For traders, expect continued volatility: short-term bias is bearish (pressure until Fed signals soften or dollar weakens), while longer-term positioning might favor accumulation on confirmed inventory/flow-driven dips or technical oversold reversals. Monitor Fed communications, CPI/PCE prints, DXY moves, ETF flows, CFTC net positions, LBMA stocks, and key technical levels for triggers.