Market Speculation and Silver’s Price Action
Despite a brief period when the dollar tumbled following a dovish interpretation of Powell’s comments in early November, the overall sentiment in the market remains cautious. Fed funds futures traders are currently pricing in a 22% chance of an additional hike by January. Analysts, however, warn that the market may be underestimating the likelihood of continued monetary tightening, given the persistent global inflation.
Treasury Yields and Economic Outlook
The 10-year U.S. Treasury yield edged higher over the week, reflecting investor considerations of future inflation and monetary policy. The muted demand at a recent 30-year bond auction, which saw the yield on the 10-year Treasury climb significantly, indicates investor concerns about the long-term economic outlook and monetary policy.
Short-Term Forecast for Silver
Looking ahead, the outlook for silver appears to point lower in the near term. This trend is expected to continue unless there is an escalation in geopolitical events, a weak U.S. economic report, or indications from the Fed that it is done raising rates.
The interplay between the dollar’s strength, Treasury yields, and the Fed’s monetary policy will be critical in shaping silver’s price action in the coming weeks.