The chain reaction of (Silver) continuous rise: The arrow shot by the sharp decline in US Treasury yields

Last Wednesday, in the Asian market, (XAG/USD) silver prices rose for three consecutive trading days, approaching $52 per ounce. This is not just a simple price increase but signifies the beginning of a chain reaction triggered by the Fed’s interest rate cut cycle.

Falling U.S. Treasury Yields Drive Silver Prices

Typically, the purchasing power of silver, an interest-free asset, is inversely related to government bond yields. Currently, the U.S. 10-year Treasury yield fluctuates around 4.00%, but on a weekly basis, it has declined by approximately 3.4%. As the opportunity for interest income diminishes, investors are accelerating their shift toward tangible assets.

CME FedWatch data reveals how steep market expectations are. The probability of the Fed cutting the benchmark interest rate by 25 basis points at the December meeting, lowering it to the 3.50–3.75% range, has risen from 50.1% a week ago to 85.3% now. This indicates an almost confirmed scenario.

Signals from the Fed Accelerate Monetary Easing

New York Fed President John Williams stated in a speech last Friday, “While current monetary policy remains restrictive, recent measures have increased the degree of easing,” and “there is room for additional policy adjustments in the short term.” This signals a step back from the previous hawkish stance and suggests that dovish members within the Fed are gaining influence.

More notably, there is speculation that political uncertainty could act as a catalyst to accelerate the easing cycle. According to Bloomberg, Kevin Hasset, a former White House economic advisor, is being considered as a potential successor to Chair Jerome Powell. If allies of former President Donald Trump join the Fed(FOMC), there is a possibility of early termination of high-interest policies. This is expected to be a positive factor for physical assets like gold and silver in the medium to long term.

Technical Analysis: Breaking $52 as the Next Target

Looking at the spot silver chart, a clear upward trend is visible.

Current Price and Trend Confirmation

• Price: approximately $51.94
• 20-day EMA: acting as solid support from above
• RSI: 59.15, above 50, approaching overbought territory

The fact that silver remains above the upward-sloping 20-day EMA(EMA) indicates a healthy short-term bullish trend. Additionally, the RSI has not entered overbought levels(70 or above), suggesting room for further gains.

Support and Resistance Levels

• Primary support: $50.40 (near the 20-day EMA)
• Medium-term support: $44.47 (September 23 high)
• Major resistance: $54.50 (all-time high)

Even if a short-term correction occurs, maintaining support around the 20-day EMA at $50.40 could form a “dip and rebound” pattern. However, if RSI drops below 50, bullish momentum may weaken, and the market could enter a sideways consolidation phase, so close monitoring is necessary.

Significance of Breaking $52 and Future Scenarios

If silver surpasses the $52 level, the challenge to the all-time high of $54.50 becomes more realistic. However, this level is a strong resistance, and multiple attempts may be needed.

Downside risks should also be considered. A rebound in U.S. Treasury yields or negative changes in expectations for Fed policy could push prices down to $44.47. Therefore, whether to accumulate around the technical support at $50.40 will be a key decision point.

Currently, the silver market is in an ideal environment created by falling U.S. Treasury yields and expectations of Fed rate cuts. As long as these two factors persist, the upward trend is likely to continue.