However, silver remains supported by a weakening US dollar and global uncertainties. The Federal Reserve’s plans for aggressive monetary easing are putting pressure on the dollar, making silver more attractive to investors looking for alternatives.
China’s stimulus and impact on silver demand
The People’s Bank of China (PBOC) recently cut the reserve requirement ratio (RRR) by 50 basis points and lowered the seven-day repo rate from 1.7% to 1.5%. These measures stimulate economic growth and create a risk-friendly environment that draws investments away from safe havens such as silver.
Despite the temporary decline in demand, silver remains an important investment amid ongoing global uncertainties. Investors are cautious and the need for certainty sustains demand for silver, especially in turbulent economic conditions.
Weakness in the US dollar supports silver prices
On the American side, the decline of the dollar has boosted silver prices. The CME Group’s FedWatch Tool indicates a 75% probability of a 0.50% rate cut by the Federal Reserve in November. Lower interest rates make silver, a non-yielding asset, more attractive compared to bonds.
In addition, US economic data have shown signs of weakness, with consumer confidence falling from 105.6 in August to 98.7 in September, and a decline in industrial activity. These factors are likely to continue to support silver in the coming months.
Short-term forecasting
Silver (XAG/USD) faces downward pressure after falling to $31.78. Immediate support at $31.68 could break, sending prices higher towards $31.51, while resistance lies at $32.24.