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Silver Price Forecast: XAG/USD Plummets as US Dollar Strengthens and Investors Await Fed Guidance

　　Lead: Silver prices have dropped below $31.00 due to a rally in the US dollar following Donald Trumps election win, with expectant eyes on upcoming Federal Reserve speeches for insights on interest rate direction.

　　Main Body:

　　In the latest trading session, silver prices (XAG/USD) have experienced a significant decline, sliding below the psychologically important level of $31.00 per ounce amid a robust performance by the US dollar. The dollar's ascendancy can be attributed to renewed optimism regarding economic policies following Donald Trumps electoral victory, which has led to anticipated increases in import tariffs and corporate tax cuts.

　　Analysts suggest that Trump's proposed fiscal policies could bolster inflationary pressures, prompting a more hawkish stance from the Federal Reserve regarding interest rates. This anticipated shift is expected to benefit the dollar and the yields on interest-bearing assets, which can increase the opportunity cost associated with holding non-yielding assets like silver.

　　Currently, the US dollar index (DXY) has surged past 105.60, while 10-year US Treasury yields have climbed to 4.37%. Investors are now closely monitoring upcoming statements from various Federal Reserve officials for guidance on future interest rate adjustments. According to the CME FedWatch Tool, the Fed is projected to cut interest rates by another 25 basis points to a range of 4.25%-4.50% in the December meeting.

　　The recent downturn in silver prices is also exacerbated by the absence of a substantial stimulus package allocation from China, a significant player in global silver demand. Analysts note that silver is crucial in various sectors, including electronics and renewable energy. According to a report from the National People's Congress (NPC), a debt package of 10 trillion yuan was unveiled to support economic growth, but many were left wanting for a more aggressive stimulus approach to the aftermath of the COVID-19 pandemic. Macquarie analysts explained that, while the NPC's fiscal plan was disappointingly modest for some expectations, it aligns with government goals to stabilize the economy rather than inject an inflationary stimulus.

　　From a technical perspective, silver has broken down through key support levels, including the upward-sloping trendline around $29.00 established since February 28, when prices were as low as $22.30. Its recent slide is further confirmed by the 50-day exponential moving average (EMA) trading around $31.60, coupled with a relative strength index (RSI) nearing 40, indicating bearish momentum.

　　As the market reacts to these economic and policy developments, silver remains sensitive to dollar fluctuations, interest rate decisions, and supply-demand dynamics driven by industrial applications.

　　Conclusion:

　　The silver market finds itself at a critical junction amidst evolving economic dynamics influenced by tariff threats, potential interest rate adjustments, and shifts in industrial demand. The current trend suggests further downside potential towards the $29.00 mark, as traders remain watchful of Fed communications and global economic signals that could steer future price movements.

　　Sources:

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