In a day of contrasting fortunes for precious metals, gold prices have remained relatively stable, while silver has experienced a significant decline, dropping below its crucial 50-day moving average—a support level closely monitored by analysts.
Gold continues to trade within a narrow range between $2,300 and $2,350 per ounce. August gold futures recently traded near session lows at $2,331.10 per ounce, marking a 0.57% decline for the day.
In contrast, silver has underperformed significantly. July silver futures last traded at $28.915 per ounce, down 2% on the day. The downward momentum intensified as silver failed to maintain support at the 50-day moving average of $29.925 per ounce.
Over the past three sessions, gold has outpaced silver, pushing the gold/silver ratio back above 80 points, nearing its highest level since mid-May.
Analysts attribute silver’s heightened sensitivity to movements in the U.S. dollar, which has rebounded from Monday’s selloff. The U.S. dollar index last traded at 105.62, up 0.10% on the day.
The U.S. dollar’s trajectory continues to be influenced by the Federal Reserve’s monetary policy, with fluctuating expectations around potential interest rate cuts. Commodity analysts note that gold has managed this volatility better than silver, as it is perceived as a more robust safe-haven asset.
While a rate cut could benefit silver, a potential economic slowdown prompting such a cut might dampen silver’s industrial demand.
Analysts highlight key support levels for silver at approximately $28.60 and $28.70.
Akhtar Faruqui, a market analyst at FXStreet.com, noted on Tuesday that silver’s technical outlook is turning negative. “The momentum indicator Moving Average Convergence Divergence (MACD) suggests a bearish bias for silver,” he said. “This configuration indicates that the overall trend might still be positive as the MACD line is above the centerline. However, the momentum is weakening as the MACD line is below the signal line.”
Faruqui added that in the current environment, silver prices could fall to $28.00, with the potential to test support at $27.76 per ounce.
Despite the short-term struggles of both gold and silver as investors focus on interest rates, many analysts view lower prices as a strategic opportunity to gain exposure, given the continued solid uptrend in precious metals.
While gold maintains an advantage over silver as a monetary metal, analysts also note that silver benefits from the green energy transition, with solar power demand driving industrial consumption.
Looking ahead, analysts expect gold and silver to remain relatively range-bound leading up to Friday’s release of the Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred inflation gauge.