Are interest rates going to fall? Silver bulls are sharpening their knives, while bears are setting a trap in the downward channel.
2025-10-27 17:55:46
On Monday, October 27th, spot silver traded below $48 during the European session. The macroeconomic narrative that day was characterized by a simultaneous decline in interest rate expectations and rising fiscal uncertainty. On the one hand, the latest soft inflation readings fueled market bets on a Federal Reserve rate cut this week. On the other hand, the intertwined political and fiscal dynamics at home and abroad saw a shift in risk appetite and safe-haven demand. Against this backdrop, silver's combined precious metal and industrial attributes became key drivers of price fluctuations.
From the perspective of interest rates and real interest rates, if the Federal Reserve lowers its policy rate or releases more dovish forward guidance at this week's meeting, the gap between nominal yields and inflation expectations could further narrow. The downward trend in real interest rates will increase the attractiveness of holding interest-free assets. Market tools suggest that investors are pricing in further easing by the Fed this year, but remain cautious about the pace and magnitude. The short-end of the curve may react more to the wording of the statement than to the actual level. This means that silver is more likely to amplify price feedback to subtle changes in the three factors: wording, expectations, and real interest rates.
From the perspective of risk appetite and safe-haven demand, recent positive news regarding trade issues between major economies has temporarily depressed some safe-haven premiums, suppressing the traditional "insurance" function of precious metals. However, at the same time, rising uncertainty on the US fiscal front (e.g., the extended government shutdown and limited economic data releases and statistics) has also propped up tail risk premiums. This combination of factors has prevented silver's safe-haven pricing from falling unilaterally, but has instead led to a rapid shift between different narratives: when risk appetite prevails, silver's industrial attributes are emphasized; when uncertainty rises, its precious metal properties are revived. This results in high-frequency fluctuations that are extremely sensitive to news.
This week's policy events are central to pricing. If the Fed eases by 25 basis points and emphasizes the uncertainty of "data-dependent" policy, it will both reinforce its medium-term view of a "peaking interest rate" and avoid overly pessimistic guidance on the growth and employment outlook. The market will closely analyze the differences between the statement and the chairman's press conference descriptions of inflation stickiness, the labor market, and the financial environment. If the message of "greater attention to risks and emphasis on data gaps" prevails, silver may be more supported by the real interest rate channel. If the message of "greater emphasis on price stickiness and reservations on the pace of rate cuts" becomes more prominent, the potential for a rebound in the US dollar and yields will need to be considered.
Uncertainty at the fiscal and data levels remains a major concern. The longer the US government shutdown lasts, the more likely it is to create a "blind spot" in macroeconomic data, prompting the market to hedge against "unseen cyclical positions" with higher risk premiums. In this scenario, silver's safe-haven and industrial weightings may shift frequently over shorter periods as events unfold, naturally leading to more volatile and noisy price performance. Furthermore, profit-taking and short-term speculation by investors chasing higher prices will amplify trading density and volatility around key price levels.
The current 30-minute spot silver chart shows prices within a downward trend and testing the lower support level near $47.548. Silver prices have recently retreated from a high of $49.429, forming a typical downward trend. Currently, prices are trading between $48.152 and $47.700. If this support level holds, silver may remain volatile in the short term.
From a technical perspective, the MACD DIFF indicator is negative, and the DEA is trending downward, indicating a weak market. Furthermore, the RSI is near 40, not yet in oversold territory, suggesting a cautious market sentiment. These indicators suggest that silver may face some selling pressure in the short term, but it is also likely to remain volatile, especially as prices approach key support levels.
Overall, silver's performance in the current range is relatively volatile and 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 track of the downward channel to further judge the short-term trend.
In recent weeks, silver's core dynamics have revolved around three main themes: First, marginal changes in policy and real interest rates determine the precious metal's core and discount; second, the US fiscal and political process influences the market's confidence in the growth and inflation paths, thereby altering safe-haven premiums and risk appetite; and third, the relative strength of energy and industrial chain prices determines whether the weight of silver's "industrial attributes" will increase. Once the policy path becomes clearer and fiscal uncertainty eases, silver may enter a phased market driven by interest rates and the US dollar, supplemented by industrial indicators. If uncertainty intensifies, a risk-averse scenario, coupled with a liquidity premium, will prevail. Neither path necessarily implies a unilateral trend, but rather a high-frequency repricing based on fundamental cues.
From the perspective of interest rates and real interest rates, if the Federal Reserve lowers its policy rate or releases more dovish forward guidance at this week's meeting, the gap between nominal yields and inflation expectations could further narrow. The downward trend in real interest rates will increase the attractiveness of holding interest-free assets. Market tools suggest that investors are pricing in further easing by the Fed this year, but remain cautious about the pace and magnitude. The short-end of the curve may react more to the wording of the statement than to the actual level. This means that silver is more likely to amplify price feedback to subtle changes in the three factors: wording, expectations, and real interest rates.
From the perspective of risk appetite and safe-haven demand, recent positive news regarding trade issues between major economies has temporarily depressed some safe-haven premiums, suppressing the traditional "insurance" function of precious metals. However, at the same time, rising uncertainty on the US fiscal front (e.g., the extended government shutdown and limited economic data releases and statistics) has also propped up tail risk premiums. This combination of factors has prevented silver's safe-haven pricing from falling unilaterally, but has instead led to a rapid shift between different narratives: when risk appetite prevails, silver's industrial attributes are emphasized; when uncertainty rises, its precious metal properties are revived. This results in high-frequency fluctuations that are extremely sensitive to news.
This week's policy events are central to pricing. If the Fed eases by 25 basis points and emphasizes the uncertainty of "data-dependent" policy, it will both reinforce its medium-term view of a "peaking interest rate" and avoid overly pessimistic guidance on the growth and employment outlook. The market will closely analyze the differences between the statement and the chairman's press conference descriptions of inflation stickiness, the labor market, and the financial environment. If the message of "greater attention to risks and emphasis on data gaps" prevails, silver may be more supported by the real interest rate channel. If the message of "greater emphasis on price stickiness and reservations on the pace of rate cuts" becomes more prominent, the potential for a rebound in the US dollar and yields will need to be considered.
Uncertainty at the fiscal and data levels remains a major concern. The longer the US government shutdown lasts, the more likely it is to create a "blind spot" in macroeconomic data, prompting the market to hedge against "unseen cyclical positions" with higher risk premiums. In this scenario, silver's safe-haven and industrial weightings may shift frequently over shorter periods as events unfold, naturally leading to more volatile and noisy price performance. Furthermore, profit-taking and short-term speculation by investors chasing higher prices will amplify trading density and volatility around key price levels.
Technical aspects
The current 30-minute spot silver chart shows prices within a downward trend and testing the lower support level near $47.548. Silver prices have recently retreated from a high of $49.429, forming a typical downward trend. Currently, prices are trading between $48.152 and $47.700. If this support level holds, silver may remain volatile in the short term.
From a technical perspective, the MACD DIFF indicator is negative, and the DEA is trending downward, indicating a weak market. Furthermore, the RSI is near 40, not yet in oversold territory, suggesting a cautious market sentiment. These indicators suggest that silver may face some selling pressure in the short term, but it is also likely to remain volatile, especially as prices approach key support levels.
Overall, silver's performance in the current range is relatively volatile and 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 track of the downward channel to further judge the short-term trend.
Looking ahead
In recent weeks, silver's core dynamics have revolved around three main themes: First, marginal changes in policy and real interest rates determine the precious metal's core and discount; second, the US fiscal and political process influences the market's confidence in the growth and inflation paths, thereby altering safe-haven premiums and risk appetite; and third, the relative strength of energy and industrial chain prices determines whether the weight of silver's "industrial attributes" will increase. Once the policy path becomes clearer and fiscal uncertainty eases, silver may enter a phased market driven by interest rates and the US dollar, supplemented by industrial indicators. If uncertainty intensifies, a risk-averse scenario, coupled with a liquidity premium, will prevail. Neither path necessarily implies a unilateral trend, but rather a high-frequency repricing based on fundamental cues.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
