Silver Price Analysis: XAG/USD plummets to near $31.00 after Trump victory, focus on Fed policy

  • Silver price falls below $31.00 as Trump’s victory reduces its appeal as a safe haven.
  • Higher US Treasury yields and the US Dollar have weighed on the price of Silver.
  • Investors will focus on the Fed’s comments for clues about the impact of Trump’s victory on the path of interest rates.

The price of Silver (XAG/USD) faces a massive drop following the landslide victory of Republican candidate Donald Trump, dropping almost 5% and falling below $31.00 in the North American session on Wednesday. The white metal weakens as investors expect Trump to seek a truce between Russia and Ukraine. A ceasefire to more than two wars between Russia and Ukraine will improve global market sentiment.

The bloodshed between Russia and Ukraine was one of the reasons behind Silver’s rally, from a low of $18.00 to a more than decade high of around $35.00 in the last two years. Historically, the scenario of geopolitical tensions is favorable for precious metals, such as Silver, as it improves their attractiveness as a safe haven.

Meanwhile, strong US Dollar (USD) strength and bond yields have also weighed on Silver. The US Dollar Index (DXY), which measures the value of the Dollar against six major currencies, posts a new four-month high of 105.30. US 10-year Treasury yields soar near 4.45%. Higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver.

US Dollar PRICE Today

The table below shows the percentage change of the US Dollar (USD) against major currencies today. The US Dollar was the strongest currency against the Euro.

USD EUR GBP JPY CAD AUD NZD CHF
USD 1.96% 1.26% 1.82% 0.78% 1.25% 0.93% 1.45%
EUR -1.96% -0.67% -0.13% -1.15% -0.69% -1.02% -0.50%
GBP -1.26% 0.67% 0.54% -0.47% -0.02% -0.35% 0.18%
JPY -1.82% 0.13% -0.54% -1.01% -0.56% -0.90% -0.36%
CAD -0.78% 1.15% 0.47% 1.01% 0.46% 0.13% 0.65%
AUD -1.25% 0.69% 0.02% 0.56% -0.46% -0.33% 0.20%
NZD -0.93% 1.02% 0.35% 0.90% -0.13% 0.33% 0.53%
CHF -1.45% 0.50% -0.18% 0.36% -0.65% -0.20% -0.53%

The heat map shows percentage changes for major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the box will represent USD (base)/JPY (quote).

Looking ahead, investors will focus on the Federal Reserve’s (Fed) interest rate decision, which will be announced on Thursday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will focus on the Fed’s comments on the impact of Trump’s victory on the inflation outlook and interest rate guidance.

Trump has promised to cut corporate taxes and raise import tariffs by 10% universally, except China, which is expected to face even higher tariffs.

Silver technical analysis

Silver price extends its decline below $31.00 after sliding below horizontal support drawn from the May 21 high of $32.50. The short-term trend of the Silver price has turned bearish as it has fallen below the 50-day EMA, which is trading around $31.60.

The asset could find support near the ascending trend line around $29.00, drawn from the February 28 low of $22.30.

The 14-day Relative Strength Index (RSI) falls near 40.00. If the RSI (14) falls below 40.00, bearish momentum will be triggered.

Silver daily chart

Source: Fx Street

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