Silver has rebounded to near $49.00 during the late Asian trading session on Wednesday, recovering from earlier lows of $47.53, a fresh two-week low. This price action reflects the market’s reaction to ongoing uncertainties surrounding US-China trade negotiations, which have historically driven demand for safe-haven assets like silver.
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Earlier in the week, silver had peaked at an all-time high of approximately $54.50, following investor optimism that a trade deal between Washington and Beijing was imminent. This confidence was bolstered by remarks from US President Donald Trump, who expressed belief in a successful meeting with Chinese leader Xi Jinping later this month in South Korea. However, Trump’s warning that the meeting might not take place has injected uncertainty into the market.
“So now we’re going to have a fair deal, and I think we’re going to have a very successful meeting,” Trump stated, but later tempered expectations by suggesting that unforeseen circumstances could arise. Such mixed signals have often increased the appeal of safe-haven investments.
In the context of macroeconomic trends, the Federal Reserve’s forthcoming interest rate policy is crucial for silver’s outlook. With a strong likelihood of a rate cut during next week’s policy meeting, lower rates would enhance the attractiveness of non-yielding assets like silver. Investors are also awaiting the delayed US Consumer Price Index (CPI) data for September, scheduled for release on Friday, which could further influence market sentiment.
On the other hand, gold has witnessed a notable correction, shedding approximately 8.6% from its recent all-time high of $4,381 on Monday to an intraday low of $4,004 on Wednesday. This represents its steepest decline since August 2020, according to MarketPulse analyst Kelvin Wong. The medium-term uptrend for gold, however, remains intact, owing to a sustained downtrend in the 10-year US Treasury real yield, which has fallen below 1.87%.
Wong noted that gold has displayed considerable volatility over the past few sessions. Despite a 1.7% loss last Friday, the yellow metal rallied by 2.4% on Monday. Yet, it faced a swift downturn on Tuesday, tumbling by 6.3% intraday before partially recovering to close at $4,125, marking a daily loss of 5.3%. Analysts suggest that stop-losses on short-term leveraged long positions contributed to the sharp decline.
Despite the recent volatility, longer-term technical indicators and key macroeconomic factors suggest that gold’s medium-term and major uptrend phases remain robust. A lower long-term US real interest rate provides a supportive backdrop for gold, reducing the opportunity costs associated with holding non-income-bearing assets.
Wong’s analysis highlights that a cap on further increases in the 10-year US Treasury real yield below 1.87% and a critical support level at 1.66% could favour gold prices moving forward. This scenario creates a positive feedback loop that may enhance gold’s appeal as a preferred investment.
