• Silver price finds an interim cushion near $29.25 but its outlook remains vulnerable.
• Higher bond yields due to the Fed’s hawkish guidance have weighed on the Silver price.
• The Fed sees only two interest rate cuts in 2025.

Silver price (XAG/USD) finds temporary support near $29.25 on Thursday after plunging almost 4% on Wednesday. The outlook of the white metal remains bearish as the Federal Reserve (Fed) has signaled fewer interest rate cuts for 2025 after cutting them by 25-basis points (bps) to 4.25%-4.50%.

The Fed’s hawkish remarks for the next year have resulted in a rally in the US Dollar (USD) and Treasury yields. The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, dropped to near 107.90 in Thursday’s European session after refreshing a two-year high of around 108.30.

10-year US Treasury yields advance above 4.50%. Higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver.

The Fed’s dot plot showed that policymakers see the Federal Funds rate heading to 3.9% by 2025, suggesting two interest rate cuts next year. In the September meeting, officials had forecasted four interest rate cuts collectively.

The Fed guided a slower policy-easing cycle as the United States (US) inflationary pressures appear to have stalled in the past few months. Meanwhile, Fed Chair Jerome Powell acknowledged that strong growth in the second half of the year is a major reason to move cautiously on interest rates.

Silver technical analysis

Silver price slides to near the 200-day Exponential Moving Average (EMA), which trades around $29.40. The white metal weakened after breaking below the November low of $29.65. The asset has also tested the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30

The 14-day Relative Strength Index (RSI) dropped inside the bearish 20.00-40.00 range, indicating a downward trend ahead.

Looking down, the September low of $27.75 would as key support for the Silver price. On the upside, the 50-day EMA around $31.00 would be the barrier.

Silver daily chart

Created on December 19, 2024

• The crude oil markets in the United States, the West Texas Intermediate Crude Oil market, initially rally during the trading session to break well above the 50 Day EMA but ended up pulling back quite significantly during the session to form a less than attractive candlestick.
• That being said, I don’t know if much has changed in my assessment of this market, because we have to keep in mind there was an FOMC meeting that of course would cause a lot of noise.

Technical Analysis

It’s worth noting that the technical analysis for this pair is somewhat sideways, and of course neutral. This makes a lot of sense, because we are trying to sort out whether or not inflation is going to increase, which obviously is a major component to the oil market. Beyond that, we also have to keep in mind that there are a lot of geopolitical concerns in the Middle East that could keep the market somewhat lightly, so with all that being said I think you’ve got a situation where you could get some geopolitical interference in this market, but right now I think what we’ve got is what could be thought of as a “bottoming process” going on.

The $65 level continues to be a major support level, while the $72.50 level above continues to be a major resistance barrier. In general, this is a market that I think continues to see a lot of questions asked of the market, but we also should keep in mind that the liquidity is probably going to shrink over the next week or so, as we head into the holidays. With this, I’m not expecting much, and I think we are simply going to be stuck with the range that we have been in in the short-term, but sometime in January I would anticipate that the market would probably start rallying to the upside as inflation doesn’t seem to be going anywhere.

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• Silver price reached a three-month low at $29.26 on Thursday.
• Non-yielding Silver depreciates as the Fed’s “dot plot,” anticipates only two rate cuts in 2025.
• The BoJ kept the short-term rate target within the range of 0.15%-0.25%.

Silver price (XAG/USD) extends its losing streak for the sixth consecutive session, trading around $29.50 per troy ounce during the Asian hours on Thursday. The price of the grey metal depreciated more than 3% after the release of the Federal Reserve (Fed) interest rate decision on Wednesday.

The Federal Reserve (Fed) delivered a hawkish cut of 25 basis points (bps) at its December meeting, bringing its benchmark lending rate to a range of 4.25%-4.50%, a two-year low. Additionally, during the Press Conference, Fed Chair Jerome Powell made clear that the Fed will be cautious about further cuts as inflation remains stubbornly above the central bank’s 2% target.

The Summary of Economic Projections, often referred to as the “dot plot,” now anticipates only two rate cuts in 2025, a decrease from the four projected in September. This adjustment may be due to robust GDP growth and persistent inflation in the United States (US). Prolonged higher interest rates tend to negatively impact the demand for non-yielding assets like Silver.

Traders will likely observe the US weekly Initial Jobless Claims, Existing Home Sales, and final reading of Gross Domestic Product Annualized for the third quarter (Q3) due on Thursday. These data points could further shape the Fed’s monetary policy expectations.

Moreover, the Bank of Japan maintained its policy rate for the third consecutive meeting, keeping the short-term rate target within the range of 0.15%-0.25% after its two-day monetary policy review, in line with market expectations. Traders expect the Bank of England (BoE) to keep interest rates unchanged later in the day.

Additionally, the industrial outlook for Silver appears constrained due to overcapacity in China’s solar panel industry, prompting photovoltaic companies to join a government self-discipline program to regulate supply.

• Gold price off monthly lows, remains below $2,600 amid the Fed’s hawkish rate cut.        
• The US Dollar consolidates at multi-month highs alongside the US Treasury bond yields. 
• Gold price remains a ‘sell-on-bounce’ trade on the daily time frame.

With the full final week of 2024 almost drawing to a close, Gold price remains vulnerable near one-month lows below $2,600, licking the hawkish US Federal Reserve (Fed) policy decision-inflicted wounds.

Gold price loses $2,600 as Fed signals fewer rate cuts in 2025

Gold price extended its corrective decline from five-week highs of $2,726 and hit the lowest level in a month near $2,580 before rebounding toward $2,600, where it now wavers.

The primary reason behind the Gold price downside is the Fed’s cautious outlook on interest rate cuts in the face of US President-elect Donald Trump’s protectionist world, which is likely to be inflationary.

The US central bank lowered policy rate by 25 basis points (bps) to 4.25%-4.50% range, as widely expected. However, the Fed’s Statement of Economic Projections (SEP), the so-called Dot plot chart, forecast two quarter-percentage-point rate reductions by the end of 2025. That is half a percentage point less in policy easing next year than officials anticipated as of September.

The Fed policymakers project inflation jumping to 2.5% from 2.1% in their prior projections for the first year under the new Trump administration.

The hawkish Fed shift triggered a sharp rally in the US Treasury bond yields, which drove the US Dollar (USD) to over two-year highs against its major rivals. The US Dollar Index (DXY) surged to 108.27, its highest since November 2022.

Looking ahead, traders will react to the Fed’s hawkish cut outcome while awaiting the policy verdicts from the Bank of Japan (BoJ) and the Bank of England (BoE). Both central banks are expected to stand pat on interest rates, but their outlooks on the policy course next year will hold the key to market sentiment.

The US Dollar could take the lead from the USD/JPY price action following the BoJ policy announcements, impacting the USD-sensitive Gold price. However, any move is likely to be temporary, as the focus will remain on the latest Fed projections.

Gold traders will also look forward to the US data releases, including the third-quarter growth revision, Jobless Claims and Existing Home Sales data, for fresh trading impetus ahead of Friday’s US November PCE inflation report.

Gold price technical analysis: Daily chart

The daily chart shows that Gold price is testing the key 100-day Simple Moving Average (SMA) at $2,605 on its tepid recovery attempt early Thursday.

Recapturing that level on a daily closing basis is critical to unleashing additional recovery.

The next topside barrier is at the December 17 low of $2,633, followed by the 21-day Simple Moving Average (SMA) of $2,650.

The 14-day Relative Strength Index (RSI) has ticked up but remains below the 50 level, suggesting that Gold price remains a good selling opportunity on rebounds.

If the turnaround fizzles out, Gold sellers will again challenge the monthly low of $2,583.

The November 15 and 14 lows at $2,555 and $2,537, respectively, could come into play.

Signs Correction Complete

The recent retracement low on December 4 was at 2.98. That decline completed a 61.8% Fibonacci retracement at 3.02 and returned to the breakout area of a large symmetrical triangle pattern. This is classic bullish behavior as a prior resistance zone was successfully tested as support and an advance followed. The 20-Day MA (purple) has done a good job of marking dynamic support for the uptrend since it was reclaimed on October 29.

Recently, it was tested as support on multiple days, including yesterday. Although natural gas fell through the 20-Day line on six days recently, beginning with the December 4 low, it managed to close above the line each day. So, there was a fast recovery, which points to underlying demand.

Strong Momentum Needed for Breakout

There is the potential for a continuation to new trend highs, but the attempt to break out to new trend highs was cut short last week as resistance was seen around 3.56. That is where resistance was seen following the initial bull breakout on November 20. Tuesday’s reversal day showed strength that now needs further follow-through. Momentum will need to be strong enough during this rally to break through 3.56. Otherwise, natural gas could consolidate a bit before it is ready to attempt a trend continuation breakout.

Near-Term Support at 3.09 Needs to Hold

On the downside, a drop through Tuesday’s low of 3.09 could lead to a retest of the 2.98 price zone and a decline below it. Also, a daily close below the 20-Day MA would be one sign of weakness. It is interesting to note that the rising 50-Day MA (orange), now at 2.88, is close to converging with the top trendline across the top of the triangle and it will likely be above in the coming days. That would improve the chance that support would be seen at or above the 50-Day line if a deeper correction develops.

For a look at all of today’s economic events, check out our economic calendar.

XAU/USD Current price: $2,637.81

• Federal Reserve expected to trim benchmark rate by 25 bps, offer a glance into 2025.
• The US Dollar holds near its recent weekly highs against most major rivals.
• XAU/USD is technically bearish in the near term, aims to pierce the weekly low at $2,633.

Speculative interest holds its breath on Wednesday, resulting in little action across the FX board. Investors await the Federal Reserve’s (Fed) monetary policy announcement as the central bank ends its two-day meeting. United States (US) policymakers are expected to cut the main interest rate by 25 basis points (bps) and share their views on key macroeconomic indicators and the future of monetary policy through the Summary of Economic Projections (SEP) or dot-plot.

Finally, Chairman Jerome Powell will offer a press conference. Market players will be looking for clues on upcoming decisions, while Powell will do as usual and pour cold water on any speculation that can disrupt the market’s behaviour.

Generally speaking, the US Dollar (USD) is strong across the FX board, trading near its weekly highs against most major rivals. The basic idea of the market reaction following the aforementioned events is whether the outcome is dovish or hawkish. A hawkish central bank tends to translate into a stronger local currency, while the opposite scenario is also valid, with a dovish stance resulting in a weaker currency. Things, however, are never that straightforward.

The Fed is expected to cut rates (dovish) while delivering a hawkish message. The hawkish cut is priced in, and the market will react to 2025 expectations.

XAU/USD short-term technical outlook

Technically,  the daily chart for the XAU/USD pair shows the pair is down for a second consecutive day, although it is holding above the weekly low set at $2,633. In the same chart, a flat 20 Simple Moving Average (SMA) provides dynamic resistance at around $2,655. The 100 and 200 SMAs keep heading higher, well below the current level, limiting the long-term bearish potential. Finally, technical indicators are neutral-to-bearish, developing around their midlines and failing to provide clear directional clues.

The 4-hour chart shows that the risk skews to the downside. The XAU/USD pair trades below all its moving averages, while the 20 SMA is heading firmly lower after crossing below directionless 100 and 200 SMAs. At the same time, technical indicators gain downward traction within negative levels, supporting a fresh leg lower beyond the $2,633 weekly low.

 Support levels: 2,633.00 2,617.90 2,603.15

Resistance levels: 2,643.40 2,657.30, 2,672.70  

• 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