Silver prices (XAG/USD) dropped below $57 amid profit-taking after touching record highs. However, expectations of a US Federal Reserve interest rate cut and tight supply concerns may limit further losses and support a bullish long-term outlook.
Silver prices fell to around $56.70 during Asian trading on December 2, pulling back from recent record highs above $57. The drop reflects traders booking profits after a strong rally this year, where silver climbed over 12% in a single week supported by industrial demand and investment interest.
Market watchers note that despite the pullback, silver’s fundamentals remain robust. Forecasts for a 25 basis point cut in US interest rates this month could reduce the opportunity cost of holding silver, a non-yielding asset, supporting prices. Additionally, supply constraints due to limited mining output and recycling rates are expected to cap downside risks.
Technically, silver faces immediate support at approximately $56.45, with resistance levels near $58 and $60 posing upside targets. The Relative Strength Index (RSI) indicates the market is currently somewhat overbought, suggesting possible short-term corrections.
Key Highlights:
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Silver price dips below $57 amid profit-taking after recent highs.
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Fed’s expected interest rate cut may provide price support.
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Supply tightness from mining and recycling constraints limits declines.
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Silver’s industrial and investment demand remains strong.
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Technical support at $56.45; upside targets at $58 and $60.
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RSI shows overbought conditions, hinting at possible short-term pullbacks.
Source: DailyForex, FXStreet, TalkMarkets, NiftyTrader