US Treasury Secretary calls for a 50 basis point rate cut? Silver's rise but hidden risks
2025-08-14 09:54:37
In the Asian market on Thursday (August 14), spot silver continued its upward trend on Wednesday and is now trading around $38.58 per ounce, up about 0.28%, approaching the nearly two-week high set overnight; spot silver rose 1.63% on Wednesday, boosted by market bets on a Federal Reserve interest rate cut and a plunge in the U.S. 10-year Treasury yield.
Spot silver prices hit $38.65 per ounce on Wednesday, a 13-day high. Next resistance lies at $39.00, followed by the year-to-date high of $39.53. If $38.00 falls below, downside risks lie at $37.50 and $36.21. Silver prices rose over 1.63% on Wednesday, driven by broad-based dollar weakness as traders fully priced in a rate cut from the Federal Reserve at its next meeting. Consequently, U.S. Treasury yields, which have an inverse correlation with spot silver, fell five basis points to 4.236% along with the benchmark 10-year bond.
(U.S. 10-year Treasury yield chart)
U.S. Treasury Secretary Benson said in an interview on Wednesday (August 13) that the Federal Reserve's interest rate should be 150-175 basis points lower than it is now. If the data is accurate, the Fed may have cut interest rates earlier. Benson believes that the Fed has the possibility of cutting interest rates by 50 basis points, and a series of rate cuts may start with a 50 basis point cut in September.
When talking about the selection of the Fed chairman, he mentioned that they will cast a wide net to include 10-11 people. He also said that he had proposed the establishment of a "shadow Fed chairman", but now believes that it is not necessary.
In addition, Bessant believes that the Fed does not need to re-implement large-scale asset purchases (QE). When discussing the employment report, he expressed his opposition to stopping the release of the employment report, but stressed the need for reliable data. Some analysts say that the probability of the Fed cutting interest rates by 50 basis points in September is almost zero. To achieve this, we would likely need another weak non-farm payroll report in September.
Silver's upward trend remains intact, with prices hitting a three-week high of $38.65. Buyers have cleared the highs of the previous rally on the silver price decline path before challenging $39.00. They are eyeing this year's all-time high of $39.53. From a price action perspective, if these two levels are attacked or even broken, the gray metal could test $40.00 in the near term.
As indicated by the Relative Strength Index (RSI), momentum is bullish. However, the MACD is low, raising the risk of further upward divergence. If this breaks out, a break below $38.00 in spot silver could put pressure on bulls, with bears potentially challenging the recent cycle low of $37.50, set on August 12. If this level falls below, the next area of focus would be the July 31 swing low of $36.21.
(Spot silver daily chart, source: Yihuitong)
At 9:53 Beijing time, spot silver was trading at $38.59 per ounce.
Spot silver prices hit $38.65 per ounce on Wednesday, a 13-day high. Next resistance lies at $39.00, followed by the year-to-date high of $39.53. If $38.00 falls below, downside risks lie at $37.50 and $36.21. Silver prices rose over 1.63% on Wednesday, driven by broad-based dollar weakness as traders fully priced in a rate cut from the Federal Reserve at its next meeting. Consequently, U.S. Treasury yields, which have an inverse correlation with spot silver, fell five basis points to 4.236% along with the benchmark 10-year bond.
(U.S. 10-year Treasury yield chart)
U.S. Treasury Secretary Benson said in an interview on Wednesday (August 13) that the Federal Reserve's interest rate should be 150-175 basis points lower than it is now. If the data is accurate, the Fed may have cut interest rates earlier. Benson believes that the Fed has the possibility of cutting interest rates by 50 basis points, and a series of rate cuts may start with a 50 basis point cut in September.
When talking about the selection of the Fed chairman, he mentioned that they will cast a wide net to include 10-11 people. He also said that he had proposed the establishment of a "shadow Fed chairman", but now believes that it is not necessary.
In addition, Bessant believes that the Fed does not need to re-implement large-scale asset purchases (QE). When discussing the employment report, he expressed his opposition to stopping the release of the employment report, but stressed the need for reliable data. Some analysts say that the probability of the Fed cutting interest rates by 50 basis points in September is almost zero. To achieve this, we would likely need another weak non-farm payroll report in September.
Technical Analysis:
Silver's upward trend remains intact, with prices hitting a three-week high of $38.65. Buyers have cleared the highs of the previous rally on the silver price decline path before challenging $39.00. They are eyeing this year's all-time high of $39.53. From a price action perspective, if these two levels are attacked or even broken, the gray metal could test $40.00 in the near term.
As indicated by the Relative Strength Index (RSI), momentum is bullish. However, the MACD is low, raising the risk of further upward divergence. If this breaks out, a break below $38.00 in spot silver could put pressure on bulls, with bears potentially challenging the recent cycle low of $37.50, set on August 12. If this level falls below, the next area of focus would be the July 31 swing low of $36.21.
(Spot silver daily chart, source: Yihuitong)
At 9:53 Beijing time, spot silver was trading at $38.59 per ounce.
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