• Silver price slumps to near $30.30 as investors turn cautious ahead of the Fed’s policy meeting.
• Traders have fully priced in a 25-bps interest rate cut by the Fed.
• Economists see the Fed cutting interest rates three times in 2025.

Silver price (XAG/USD) falls to near $30.30 in the North American session on Wednesday. The white metal drops as investors turn cautious ahead of the Federal Reserve’s (Fed) monetary policy announcement at 20:00 GMT.

According to the CME FedWatch tool, traders have priced in a 25-basis points (bps) interest rate reduction, which will push borrowing rates lower to 4.25%-4.50%. Therefore, investors will pay close attention to the Fed’s dot plot, which shows where policymakers see Federal Fund Rates heading in the medium and long term.

A Bloomberg survey from December 6 to 11 showed that economists see the Fed reducing interest rates three times next year, assuming that progress in the disinflation process has slowed more than anticipated. The survey also indicated that economists have become more worried about upside risks to inflation than downside risks to employment, given incoming President-elect Donald Trump’s policies, including mass deportations, higher import tariffs, and tax cuts.

Ahead of the Fed meeting, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, consolidates around 107.00. Meanwhile, 10-year US Treasury yields rise to nearly 4.40%. Higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, because they increase their opportunity costs.

Silver technical analysis

Silver price slides to a fresh two-week low near $30.20 on Wednesday. The white metal weakens after breaking below the 20-day Exponential Moving Average (EMA), which trades around $30.95.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal resistance plotted from the May 21 high of $32.50 would be the barrier.

Silver daily chart

Rising non-OPEC+ production and only modest growth in global oil demand will leave the market well-supplied next year, analysts say, as they remain cautiously bearish on crude oil prices amid a myriad of uncertainties in 2025.

At the end of 2024, investment banks said they expect oil prices to stay around the current levels for 2025—in the low $70s per barrel Brent—with risks skewed to the downside on potential escalation of trade tensions.

Analysts and traders are aware that the only certain thing about oil price forecasts is that they turn out to be wrong. But with the current market fundamentals and geopolitical events, experts are more bearish than bullish on oil prices next year.

Bearish Views

The oil market will see a surplus next year even if OPEC+ begins to unwind its production cuts in April 2025 as currently planned, most analysts and investment banks say.

In early December, the OPEC+ group decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026.

Due to the OPEC+ decision, next year’s surplus may not be as large as previously feared, but a surplus we will see, banks say.

“For now, we expect the oil market to be in surplus next year – although much will depend on OPEC+ production policy,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a recent note.

Oil demand growth will stay “fairly modest” in 2025 due to both cyclical and structural factors, the strategists said.

“In addition, we see another year of strong non-OPEC supply growth while OPEC still sits on a significant amount of spare production capacity, which should continue to provide comfort to the market,” they added.

The International Energy Agency (IEA) has long been predicting a large surplus in 2025.

Related: U.S. Shale Nears Limits of Productivity Gains

Even if OPEC+ keeps its oil production as-is for the whole of 2025, there would still be a surplus in supply of 950,000 barrels per day (bpd) next year, the IEA said in its monthly report last week.

If OPEC+ does begin unwinding the voluntary cuts from the end of March 2025, this glut will swell to 1.4 million bpd, according to the agency.

Global oil demand is set to rise by 1.1 million bpd next year, but it wouldn’t be able to absorb all the non-OPEC+ growth in supply coming mainly from the United States, Brazil, and Guyana, the IEA says.

OPEC also acknowledges demand has been lower this year than initially expected due to disappointing consumption figures coming out of China. The cartel last week revised down its demand growth projection for 2024 for a fifth consecutive month.

The unwinding of the OPEC+ cuts, if it is executed as planned at the latest meeting of the group, would lead to an average global inventory build of 100,000 bpd beginning in the second quarter, the EIA said in its Short-Term Energy Outlook (STEO) for December.

“We forecast that inventory builds will put some downward pressure on crude oil prices later in 2025, with Brent falling from an average of $74/b in 1Q25 to an average of $72/b in 4Q25,” the EIA said.

The administration expects an average annual Brent Crude price of $74 per barrel in 2025, down from an average of $80/b this year.

Analyst polls in recent months have also shown this trend—experts have been downgrading oil price forecasts amid weaker demand and strong supply growth.

Brent Crude prices are set to average $74.53 per barrel next year as weaker global demand growth and enough supply would offset the impact of a potential delay to the OPEC+ cuts, said 41 analysts and economists in the Reuters monthly survey for November.

Stricter U.S. sanctions against Iran under Donald Trump and geopolitical tensions could provide some support to prices early next year, but overall, expected tepid demand will weigh down on oil prices, according to analysts.

China’s looser monetary policy could revive the economy and boost demand for oil, but President-elect Trump’s promise to raise tariffs on China could weigh on economies, with tit-for-tat tariffs presenting a further downside risk to trade, economic growth, and oil demand growth.

The latest Chinese stimulus and potential further loosening of the monetary policy “could also be key for China to offset tariff threats from the US in 2025 and the move shows determination in quest to avoid a sharp economic slowdown,” Saxo Bank said last week.

Wild Cards

The incoming Trump Administration and geopolitics with the Middle East and the Russia-Ukraine war are the biggest wild cards for the world and economies next year.

Tariff threats and escalating trade tensions between the U.S. and all its trade partners – including Canada – present downside risks to oil prices. So does a strengthening U.S. dollar, amid all the tariff talk, as crude would become more expensive for holders of other currencies.

The uncertainties in 2025 could propel gold prices to new record highs, as gold would be a move to safe-haven assets amid escalating trade tensions, ING says.

“Overall, we hold a somewhat bearish view on large parts of the commodities complex for 2025 on the back of relatively comfortable fundamentals, while expectations of a stronger USD should also provide some headwinds,” ING’s strategists note.

“In addition, external risks facing markets appear to be skewed to the downside.”

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com

• Silver meets with a fresh supply near the 100-day SMA pivotal support breakpoint.
• The technical setup suggests that the path of least resistance is to the downside.
• Bears might still wait for a sustained break and acceptance below the $30.00 mark.

Silver (XAG/USD) struggles to capitalize on the previous day’s modest rebound from the vicinity of the monthly low, around the $30.00 psychological mark and attracts some sellers on Wednesday. The white metal remains depressed through the first half of the European session and currently trades just below mid-$30.00s, down nearly 0.30% for the day. 

From a technical perspective, the recent failure near the $32.35 horizontal resistance and a subsequent slide back below the 100-day Simple Moving Average (SMA) favors bearish traders. Moreover, oscillators on the daily chart are holding in negative territory and are far from being in the oversold zone, suggesting that the path of least resistance for the XAG/USD is to the downside. 

That said, it will still be prudent to wait for a sustained breakdown below the $30.00 mark before positioning for deeper losses. The XAG/USD might then weaken further below the November monthly swing low, around the $29.70-$29.65 area, towards testing the next relevant support near the $29.10-$29.00 region, which if broken should pave the way for an extension of a near two-month-old downtrend. 

On the flip side, the 100-day SMA, currently around the $30.60 region, closely followed by the weekly top near the $30.75 area, now seems to act as an immediate hurdles. Some follow-through buying could assist the XAG/USD to reclaim the $31.00 mark and climb to the $31.45-$31.50 supply zone. The move up could extend towards the $32.00 round figure, which if cleared will negate the bearish outlook.

Silver daily chart

• Silver price consolidates within the horizontal channel pattern.
• The alignment of the nine- and 14-day EMAs indicates an absence of clear directional momentum.
• The 14-day RSI consolidates below the 50 mark, suggesting an emergence of the bearish bias.

Silver price (XAG/USD) remains subdued for the fifth successive day, trading around $30.50 per troy ounce during the Asian hours on Wednesday. Analysis of the daily chart indicates a period of market consolidation as the pair is confined within the horizontal channel pattern.

Additionally, the alignment of the nine- and 14-day Exponential Moving Averages (EMAs) suggests that the short-term price movement is experiencing a period of consolidation, lacking a strong directional momentum. However, the 14-day Relative Strength Index (RSI) consolidates below the 50 mark, suggesting an emergence of the bearish bias.

On the downside, the XAG/USD pair may find its primary support around the lower boundary of the horizontal channel at $29.90, followed by a “throwback support” level at its three-month low of $29.65, which was recorded on November 28.

Regarding its resistance, the XAG/USD may test the nine- and 14-day EMAs at $30.82 and $30.90, respectively. A break above these levels could cause the bullish bias to re-emerge and help the Silver price to retest its six-week high of $32.28, reached on December 9, followed by the horizontal channel’s upper boundary at $32.50.

XAG/USD: Daily Chart

• Gold price recovers from weekly lows, struggling near $2,650 ahead of the Fed policy verdict.        
• The US Dollar stays defensive as Treasury bond yields pause amid market caution.  
• The daily technical setup suggests that Gold price remains exposed to downside risks.

Despite the latest uptick, Gold price remains in a familiar range near $2,650 early Wednesday. Gold price appears to lack bullish commitment in the lead-up to the US Federal Reserve (Fed) showdown.

Gold price looks to Fed decision and Powell’s presser

Gold price has failed to sustain the upside attempts so far this week, giving into the bearish pressures on Tuesday to hit the lowest level in six days at $2,633. The unabated buying interest in US Treasury bond yields mainly sponsored the downturn in Gold price. Markets continued to believe that the Fed could pause its easing cycle early next year, especially after robust US Retail Sales data.

US Retail Sales increased 0.7% in November, outpacing expectations of a 0.5% growth in the reported period. However, the US Treasury bond yields quickly pulled back due to worsening risk sentiment on global markets. Traders turned cautious and refrained from placing bets on risk assets ahead of the critical Fed interest rate decision. This helped Gold price to limit losses and regain $2,640 at the close.

Markets remain risk-averse early Wednesday, with traders non-committal on their US Dollar positions, leaving Gold price gyrating in a narrow band. The next direction in Gold price now remains at the mercy of the language in the Fed’s policy statements, its economic projections and Chairman Jerome Powell’s press conference.

If the Summary of Economic Projections (SEP), the so-called ‘Dot-plot’ chart, points to fewer rate cuts next year than previously forecast, the US Dollar will likely see a fresh leg higher at the expense of the non-interest-bearing Gold price. Powell’s comments will also be closely scrutinised for the timing of the next rate cut if he expresses caution about inflation under Donald Trump’s presidency.

Risks appears skewed to the downside in Gold price, justified by the hawkish Fed expectations and the daily technical setup.

Gold price technical analysis: Daily chart

The daily chart shows that Gold price surrendered the 21-day Simple Moving Average (SMA) at $2,655 once again.

The 14-day Relative Strength Index (RSI) is trading flat but below the 50 level, suggesting that sellers could retain control going forward.

The immediate resistance aligns at the 21-day SMA at $2,655. However, Gold buyers need to find acceptance above the 50-day SMA at $2,672 to initiate a meaningful upside toward the $2,700 level.

Further up,  Gold price could revisit the multi-week high of $2,726.

On the downside, the weekly low of $2,633 could offer some support, below which the December 6 low of $2,613 will be tested.

Gold sellers will then target the $2,600 area, where the 100-day SMA coincides with the November 26 low.