On Wednesday (October 23) during the European trading session, silver prices began to decline after hitting a multi-year high of $34.87 in the previous trading day. However, the market still faces resistance at $35.40 and needs to hold onto the support level of $34.35 to maintain its upward momentum. If this support level cannot be held, it may trigger profit taking and push down silver prices, with $32.52 being a potential target.

Despite the strong trend of silver prices, they are currently significantly above the 50 day moving average of $30.57, increasing the risk of a recent pullback. Long term investors may view any pullback as a buying opportunity.

The yield of US treasury bond bonds rose, and the silver price was under pressure

The yield of US treasury bond bonds has been rising, reaching a three-month high, which supports the US dollar, but also puts additional pressure on silver. The yield of the 10-year US treasury bond bond hit 4.2316%. After recent economic data showed that the US economy continued to strengthen, traders reconsidered how much the Federal Reserve might cut interest rates. Higher yields typically reduce the attractiveness of interest free assets such as silver, but silver prices have remained strong due to risk averse investors seeking safe haven options amidst the ongoing geopolitical tensions in the Middle East.

The uncertainty of elections and the impact of a strong US dollar on silver

Due to the upcoming US election increasing market uncertainty, silver also benefits from safe haven demand. In less than two weeks before election day, investors are preparing for potential volatility. Donald Trump's chances of defeating Kamala Harris have slightly increased, but there is still pressure in opinion polls. At the same time, as expectations of significant interest rate cuts weaken, the US dollar strengthens. This usually puts pressure on precious metals, but silver has withstood this trend and risen alongside gold as a hedge against political and economic instability.

The Russian central bank has started buying silver

A significant development in the silver market was Russia's decision to include silver in its central bank reserves for the first time. This move is part of Russia's efforts to diversify its precious metal reserves, which currently include gold, platinum, and palladium. The increase in silver may increase demand and support prices in the medium term. Historically, central banks have been focused on gold, but this diversification may indicate that silver is undervalued. Analysts predict that driven by central bank demand and industrial applications such as photovoltaics and electronics, this could lead to a 50% price increase in the next two years.

Short term forecast

In the short term, silver prices are still at a critical juncture. Despite the bullish long-term fundamentals, including industrial demand and central bank purchases, recent risks are on the rise. If it fails to remain above $34.35, it may lead to a correction phase that could push the price down to $32.52. However, if silver can consolidate and break through the resistance level of $35.40, the next phase of upward movement may begin. At present, traders should pay attention to the fluctuations surrounding the US presidential election and the next interest rate measures of the Federal Reserve.