Silver prices remained rangebound on Thursday as market participants digested the Federal Reserve's latest policy decision. The precious metal was trading near $53.97, a level it has held for the past several sessions, and remains roughly 24% below its September peak. Chart patterns indicate that further downside may be on the horizon.
Fed Decision and Its Impact on Silver
The Federal Reserve left its benchmark interest rate unchanged in the 3.75%–4.00% range, though two officials dissented in favor of a 25-basis-point hike. In his post-meeting press conference, Fed Chair Kevin Warsh emphasized that inflation remains too elevated, citing September's headline CPI at 3.7% and core CPI at 2.6%, both above the central bank's 2% target.
Market analysts, including those at Goldman Sachs, now anticipate a rate increase at the December meeting. The expectation is driven by persistent inflationary pressures, particularly from rising gasoline and diesel prices. A more hawkish Fed typically weighs on silver, as higher yields make interest-bearing assets more attractive relative to non-yielding metals.
Indeed, U.S. Treasury yields have climbed, with the 10-year note reaching 5% and the 5-year at 4.8%. This yield advantage often prompts investors to rotate out of silver and into bonds. Additionally, elevated borrowing costs can dampen industrial activity, which is significant for silver given its widespread use in electronics, solar panels, and appliances.
Upcoming Economic Data as Catalysts
The next major test for silver will be the release of the Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, scheduled for later today. Economists will also be watching the third-quarter GDP report, with consensus estimates pointing to an annualized growth rate of 3.2%, up from 2% in the second quarter, largely driven by data center construction.
On the positive side, the iShares Silver Trust (SLV) has seen continued inflows, with three-month additions exceeding $960 million. This suggests that some investors are positioning for a potential rebound, even as near-term technicals look bearish.
Technical Outlook: Bearish Patterns Emerge
From a technical perspective, silver has formed an inverted cup-and-handle pattern, a classic continuation signal. The metal has already broken below the cup's lower boundary at $54. Additionally, a bearish flag pattern—comprising a sharp decline followed by a horizontal consolidation—has developed. Silver is trading below its 50-day and 100-day moving averages, as well as the Supertrend indicator, reinforcing the bearish bias.
The most probable scenario is a breakdown toward the key support level of $50. However, a decisive move above the $54 resistance would invalidate the bearish outlook and could trigger a recovery.
This article is for informational purposes only and does not constitute financial advice.
