While gold prices have hovered within a tight range, silver has taken a sharp hit, falling below its critical 50-day moving average, a key support level closely monitored by analysts.
Gold remains confined within a narrowing band of $2,300 to $2,350 an ounce. August gold futures were last seen trading near session lows at $2,331.10 an ounce, down 0.57% for the day.
In contrast, silver has markedly underperformed. July silver futures were last traded at $28.915 an ounce, down 2% for the day. The downward momentum increased when silver failed to maintain support at its 50-day moving average of $29.925 an ounce.
Gold’s relative strength has been evident over the past three sessions, driving the gold/silver ratio back above 80 points, its highest level since mid-May.
Analysts attribute silver’s sensitivity to movements in the U.S. dollar, which has rebounded from Monday’s selloff. The U.S. dollar index was last traded at 105.62, up 0.10% for the day.
The dollar’s performance continues to be influenced by the Federal Reserve’s monetary policy, with market expectations fluctuating regarding the timing of potential interest rate cuts. Commodity analysts note that gold has weathered this volatility more effectively due to its status as a stronger safe-haven asset compared to silver.
Although a rate cut would typically benefit silver, a slowing U.S. economy prompting such a move could dampen silver’s industrial demand, impacting its price negatively.
Key support levels for silver are now around $28.60 and $28.70, according to analysts.
Akhtar Faruqui, a market analyst , highlighted silver’s deteriorating technical outlook in a note on Tuesday. “The momentum indicator Moving Average Convergence Divergence (MACD) suggests a bearish bias for silver,” he said. “While the overall trend might still be positive as the MACD line is above the centerline, the weakening momentum is evident with the MACD line below the signal line.”
Faruqui predicts that, under the current conditions, silver prices could fall to $28.00, potentially testing support at $27.76 an ounce.
Despite near-term struggles for both gold and silver as investors focus on interest rates, many analysts see lower prices as a tactical opportunity to increase exposure, given the solid uptrend in both precious metals.
Gold, often viewed as the superior monetary metal, continues to hold an advantage over silver. However, silver benefits from the green energy transition, particularly due to industrial demand driven by solar power. This dual role also positions silver as a more attractive inflation hedge compared to gold.
Looking ahead, analysts expect gold and silver to remain range-bound ahead of Friday’s Personal Consumption Expenditures (PCE) Index release, the Federal Reserve’s preferred inflation gauge.
