Silver prices rose 1.17% to $42.28 in European trading on Friday (September 19). Future trends will determine whether bulls are able to push prices to all-time highs or whether a correction is imminent.



The battle between bulls and bears at current prices comes as the market digests overall macroeconomic dynamics, including the Federal Reserve's interest rate cuts and rising U.S. Treasury yields - both of which weigh on metals market sentiment.

Despite the Federal Reserve's expected 25 basis point rate cut, silver traders haven't seen a significant boost. Similar to gold, silver is being held back by rising long-term Treasury yields: the 10-year Treasury yield is at 4.131%, while the 30-year Treasury yield has risen to 4.743%. These levels continue to push up the cost of holding non-yielding assets, limiting new bullish inflows.

The Federal Reserve's comments also failed to boost sentiment. Chairman Powell interpreted the rate cut as a risk management measure rather than the beginning of a full-blown easing cycle. Traders who had bet on aggressive stimulus policies were disappointed, while the US dollar index (DXY) rose to 97.347, creating further resistance for silver.

Focus on $42.06, can the bulls break through?

The technical outlook remains stagnant. A strong breakout above $42.06 could trigger buying, pushing prices towards the all-time high of $42.97. This high is clearly in sight if momentum strengthens and external pressures ease. However, if buyers fail to hold above $42.06, silver could quickly fall back to $41.68. If this support level fails, the decline could extend to $41.14, or even the $39.96-39.59 range.

Last week's close of $42.19 is also crucial. A weekly close below this level could create a potential topping pattern on the chart and could trigger a multi-week pullback without changing the overall uptrend.

Gold outlook sends cautious signals, but Citigroup sees target at $3,800

Gold's technical charts also show similar signs of hesitation. While holding above $3,627.96, prices remain capped below $3,658.03. Failure to break through could hinder aggressive buying for metals. However, Citigroup has raised its gold price forecast to $3,800, citing risks to US fiscal health and inflation concerns. If this bullish outlook materializes, it could drive silver higher, particularly as concerns about stagflation intensify, providing upward momentum.

Silver outlook: holding ground for now, but downside risks are increasing


(Source of spot silver daily chart: Yihuitong)

Silver's short-term trend remains constructive above $41.68, but momentum is fading below $42.06. Unless bulls quickly regain control, downside risks will intensify, especially if yields remain elevated and the dollar remains strong. Failure to hold $41.14 could accelerate silver's decline to $40 and below.

Currently, traders should consider $42.06 as a critical decision point. A decisive break above this level will reactivate bullish sentiment with a target of $42.97.