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Interest rates are going to fall? Silver bulls are sharpening their knives, and bears have laid a descending channel trap
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Official Website]: Interest rates are going to drop? Silver bulls are sharpening their knives, and bears have set up a downward channel trap." Hope this helps you! The original content is as follows:
October 27, Monday. Spot silver was trading below $48 during the European session; the macro narrative of the day was paralleled by "falling interest rate expectations" and "rising fiscal uncertainty": on the one hand, the latest inflation reading was soft, which heated up the market's bets on the Federal Reserve's interest rate cut this week; on the other hand, domestic and foreign political and fiscal processes are intertwined, and risk appetite and hedging demand are ebbing and flowing. In this context, silver's "precious metal properties" and "industrial properties" have become a key clue in the price game. From the interest rate and real interest rate channels, if the Federal Reserve lowers the policy interest rate or releases more dovish forward guidance in this week's interest rate discussion, the scissor gap between nominal yields and inflation expectations may further converge, and the downward tendency of real interest rates will increase the attractiveness of holding non-interest-bearing assets. Market tools show that investors have the upper hand in pricing the Fed to ease again during the year, but remain cautious about the pace and magnitude. The short-end curve may react more to the wording of the statement than to the point itself. This means that silver is more likely to give amplified price feedback to subtle changes in "wording-expectations-actual interest rates."
From the perspective of risk preference and hedging demand, the recent positive news surrounding economic and trade issues between major economies has periodically lowered some hedging premiums and suppressed the "insurance" function of traditional precious metals. However, at the same time, rising uncertainty on the fiscal side of the United States (such as extended government shutdowns, restrictions on economic data release and statistics) has raised the tail risk premium on the other end. The superposition of the two makes silver's safe-haven pricing not fall back unilaterally, but quickly switch between different narratives: when "risk preference" prevails, silver's industrial attributes are more emphasized; when "uncertainty" rears its head, its precious metal nature is traded again. thusWhat is formed is high-frequency fluctuations that are extremely sensitive to news.
This week’s policy event is pricing hub. If the Fed relaxes by 25 basis points and emphasizes the uncertainty of "depending on the data", on the one hand it will consolidate the mid-term judgment of "interest rates peaking and turning", and on the other hand it will avoid giving overly pessimistic guidance on growth and employment prospects. The market will closely interpret the difference between the description of inflation stickiness, the labor market and the financial environment in the statement and the chairman's press conference: If the signal of "paying more attention to risks and emphasizing data gaps" prevails, silver may be more supported by the real interest rate channel; if the message of "more emphasis on price stickiness and reservation of the pace of interest rate cuts" is highlighted, the rebound space of the US dollar and yields needs to be taken into consideration.
Uncertainties at the financial and data levels are still suspense. The longer the U.S. government shutdown lasts, the more likely it is to create a "blind spot" in macro data, and the market will hedge the "invisible cycle position" with a higher risk premium. In this case, for silver, the weight of the hedging and industrial ends may switch frequently in a shorter period as events progress, and the price performance will naturally be more jumpy and noisy. At the same time, the short-term game of profit-taking and chasing funds will amplify the transaction density and fluctuation range near key prices.
Technical aspects
Judging from the current 30-minute K-line chart of spot silver, the price is in a downward channel and is testing the lower support level near $47.548. The price of silver has recently fallen back from its high of $49.429, forming a more typical downward trend. The current price is between $48.152 and $47.700. If the support in this range is effective, silver may maintain a volatile consolidation in the short term. From the perspective of technical indicators, the difference (DIFF) of the MACD indicator is negative, and the DEA is trending downward, indicating that the current market is in a weak state. In addition, the RSI indicator is close to 40 and has not yet entered the oversold zone, and market sentiment is biased towards caution. Judging from these indicators, silver may face some selling pressure in the short term, but it may also remain volatile, especially when the price is close to key support levels.
Generally speaking, the performance of silver within the current range is relatively volatile, and it may be affected by technical adjustments in the short term. It is necessary to pay attention to whether it can effectively break through the upper or lower rail of the downward channel to further judge the short-term trend.
Looking ahead
The core logic of silver in recent weeks still revolves around three main lines: first, the marginal changes in policy interest rates and real interest rates determine the center and premium of precious metals; second, the US fiscal and political process affects the market’s confidence interval on the growth and inflation path, thereby changing the hedging premium and risk preference; third, the relative strength of energy and industrial chain prices determines whether the weight of silver’s “industrial attributes” will be increased. Once the policy path becomes clearer and fiscal uncertainty eases, silver may enter a phased market dominated by interest rates and the U.S. dollar, supplemented by industrial indicators; if uncertainty intensifies, risk aversion and a liquidity premium will prevail. Two kindsPaths do not necessarily mean trending unilaterally, but more like high-frequency repricing around fundamental clues.
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