On Wednesday (September 17) in the North American session, spot silver traded around $42. It recently fell from a high of 42.950, but was still trading above the middle Bollinger band.

Fundamentals: The sound of interest rate cuts is approaching, and the impact of the dollar and yield split on silver pricing channels

The US Dollar Index (DXY) stabilized at 96.75 after two days of decline, with its modest strength exerting procyclical pressure on precious metals. Meanwhile, low US Treasury yields safeguarded precious metals' potential as an interest-free alternative. However, silver's momentum was forced to downgrade until the Fed provided a clearer path forward. The market consensus is that the Fed will cut interest rates by 25 basis points at this meeting, lowering the target range to 4.00%-4.25%, which is seen as the first rate cut since 2025. The real suspense lies in how the dot plot and macroeconomic forecasts will portray the pace and end point of subsequent easing. Powell's press conference at 2:30 a.m. on Thursday will provide guidance on the trade-off between slowing employment and stubborn inflation.

Back to the macro context: the recent data combination will shift the focus of discussion from inflation to the downside risks of the labor market - new jobs have almost stagnated, previous values have been significantly revised downward, initial claims have hit a multi-year high, and PPI pressure has softened; although the August CPI was slightly higher than expected, the trend of cooling has not been disrupted.

CME FedWatch predicts a 94% probability of a 25bp rate cut and a 6% probability of a 50bp rate cut, suggesting the market is more focused on rebalancing the "maximum employment" mandate. Several major institutions (Goldman Sachs, Morgan Stanley, and Deutsche Bank) predict three 25bp rate cuts this year. Political noise is intensifying: Trump has publicly called for significant rate cuts, while his policy advisor Peter Navarro has advocated for a more aggressive "50bp + 50bp" approach. The swearing-in of new governor Stephen Miran has sparked debate about central bank independence. These factors are collectively shaping the risk premium curve for precious metals. Expectations of "easier but not losing independence" are more favorable to medium-term silver bulls. However, the combination of a stronger dollar and a more cautious dot plot could exacerbate short-term volatility.

Despite a short-term pullback, gold remains supported by the triple support of "easing expectations, geopolitical premium, and safe-haven demand." If the Fed signals a more dovish approach, gold prices could reach new highs. If the Fed adopts a cautious tone, the decline could deepen below a key level. Regarding silver, the gold-silver ratio rose from 86.69 to 88.15, suggesting a temporary relative trend of "gold strong, silver weak." While silver prices are under short-term pressure, the medium-term upward trend remains intact as long as the consensus on a decline in nominal macro interest rates and a soft landing for the economy remains.

Technical aspects:

(Daily Chart) Prices have been rising along an ascending channel since the June low of 32.935, recently reaching a period high at 42.950 before retreating to 41.822. The candlestick chart remains above the middle Bollinger band and near the upper Bollinger band. Bollinger Band (26,2): Middle Band 39.899, Upper Band 43.228, Lower Band 36.571. The band has been expanding since August, but has recently narrowed slightly, indicating a rebalancing of momentum within the trend continuation. If the 41.934 dotted line (a key horizontal line on the chart) is considered the proximal pivot, the current candlestick's retracing above it suggests an attempt to convert resistance into support. MACD shows DIFF 1.056 is higher than DEA 0.938, and the histogram +0.236 is positive but shortened, indicating that the bullish trend is intact and the momentum is cooling marginally. RSI (14) is around 64.470, in a strong but not overbought range, and has a slight top divergence from the previous peak of around 75. We should be wary of a "passive retracement after blunting" at high levels. Structurally, the continuous bullish candlesticks since August are similar to the rhythm of "breaking through the upper edge of a small flag pattern - rising - retracement confirmation". The current retracement strength has not yet broken the rising trend line.



Resistance/Support Range: Above: 42.950, the current high; 43.228, the upper Bollinger Band. A breakout above this with significant volume could focus on the "extended resistance band" above the 44.152 integer. Below: 41.934, the conversion level; the psychological level of 41.0; the 39.899 middle Bollinger Band and the congested moving average; further below: the 39.716 and 37.498 horizontal bands; extreme retracements focus on 36.571, the lower Bollinger Band. If a subsequent confluence of "long bearish candlesticks on large volume, a MACD death cross, and an RSI below 50" occurs, the upward trend is likely to be broken. Conversely, if a pullback with reduced volume fails to break through 41.934 and the MACD histogram turns positive and expands, it would be considered the beginning of a secondary upward move, led by volume.

Market sentiment observation: Caution amidst strength, volatility awaits "caliber catalyst"

The equity market is pricing in a more linear path for interest rate cuts, while precious metals are more sensitive to the three-dimensional intersection of "nominal interest rate + real interest rate + US dollar." The current sentiment is characterized by a dominant but not extreme bullish market sentiment:

Fear/Greed: The year-to-date gain has reached 44.00%, and the "anchoring effect" of profit-taking is significant. Any hawkish rhetoric is likely to trigger a cycle of "take-profit-retracement-rebalancing";

Volume-price structure: In the past two weeks, the K-line body has shrunk and the shadows have increased, indicating "rising upward resistance - kinetic energy consumption - waiting for catalyst";

Relative Strength: The gold-silver ratio rose to 88.15. The short-term "gold is strong and silver is weak" relative trading is still in place. Silver's resilience may be realized later in the scenario of "risk appetite recovery + industrial demand expectation recovery";

Trading factors: The density of macroeconomic events is high, "mean reversion" and "breakthrough trading" alternately dominate within the same time frame, the profit and loss ratio of short-term models faces caliber risks, and position management should take precedence over directional confidence.

Sentiment Summary: It's not a "peak," but rather a "rebalancing awaiting clear signals." Volatility is likely to exhibit a two-stage trend during the press conference window: a "suppression followed by a rise" or a "rise followed by a fall."