Silver extends 6-day losing streak,bitcoin usd testing key support at $29.50/oz
Fed's revised dot plot shows just two projected 2025 rate cuts versus four previously
Industrial demand concerns emerge amid China's solar panel oversupply
The white metal continues its dramatic selloff, with XAG/USD shedding over 3% since Wednesday's FOMC decision. This downward momentum reflects shifting macroeconomic winds as traders recalibrate expectations following the Federal Reserve's latest policy pivot.
Market participants digested the Fed's 25bps rate cut alongside surprisingly hawkish forward guidance. The central bank's updated projections now anticipate only two additional reductions in 2025, down sharply from September's forecast of four cuts. This monetary policy recalibration comes amid persistent core inflation readings and resilient economic growth indicators.
Precious metals analysts note that silver's dual nature as both monetary metal and industrial commodity creates unique price dynamics. The current environment of potentially higher-for-longer US rates diminishes silver's appeal relative to yield-bearing assets, while simultaneous concerns about Chinese industrial demand add fundamental pressure.
Thursday's Asian session saw silver prices stabilize near $29.50 after Wednesday's sharp decline. Traders now await key US economic data including jobless claims and Q3 GDP revisions, which could further influence Fed policy expectations. The Bank of England's upcoming rate decision may also impact dollar-denominated commodities.
Industrial demand factors remain mixed. While photovoltaic applications continue growing, reports suggest Chinese solar manufacturers are implementing production discipline measures to address oversupply. This development could temporarily moderate silver's industrial consumption growth in the world's largest solar market.
Technical analysts highlight that silver's breakdown below the psychologically important $30 level opens the door for potential tests of the 200-day moving average near $28.50. However, some bargain hunters may emerge given silver's historically volatile nature and its tendency to outperform gold during risk-on periods.
Understanding Silver Market Dynamics
As a hybrid asset class, silver occupies a unique position between precious metals and industrial commodities. Its price sensitivity to both monetary policy changes and manufacturing activity creates complex trading patterns that often differ from gold's more straightforward monetary metal characteristics.
The silver-gold ratio remains a key metric for precious metals investors, currently hovering near recent highs. This elevated ratio suggests silver may appear undervalued relative to gold by historical standards, though such divergences can persist during periods of dollar strength or economic uncertainty.
Looking ahead, silver's price trajectory will likely depend on three factors: the pace of Fed policy normalization, the US dollar's strength, and the recovery trajectory of key industrial sectors like renewable energy and electronics manufacturing.
