Before the European market on Monday (January 6th), silver is currently consolidating narrowly around $29.5. Silver's slight pullback from near the psychological level of $30.00 last Friday continues, and analysts believe this indicates that its rebound momentum from the multi month low reached in December of last year has stalled

The strong US dollar suppresses the trend of precious metals: the price of silver often shows a negative correlation with the US dollar index. Recently, the strong US dollar has put pressure on silver. Against the backdrop of global economic uncertainty, the US dollar has been sought after as a safe haven asset, which has to some extent weakened the market's demand for silver. In addition, the Federal Reserve's monetary policy stance still has an impact on the market, further affecting the trend of silver prices.

Inflation expectations and changes in real interest rates: As an anti inflation asset, silver's performance is highly correlated with inflation data and real interest rates. Recently, market concerns about inflation have eased, while the rise in real interest rates has put pressure on silver. The rise in real interest rates means an increase in the opportunity cost of investing in interest free assets such as silver, which may further weaken investment demand.

Limited demand for safe haven: Recently, the overall risk appetite in the market has improved, which has to some extent suppressed the demand for safe haven assets such as silver. Although geopolitical tensions still exist globally, their direct impact on the market has weakened, and the market is more inclined to choose the US dollar or US Treasury bonds rather than silver as a safe haven.

Overall, analysts believe that fundamental factors provide a bearish background for the short-term trend of silver. The strength of the US dollar and the decline in safe haven demand are putting pressure on silver, which may limit its rebound potential.

In terms of technology, analyst Menghani provided the following interpretation:

From a technical analysis perspective, the recent trend of silver has also shown a relatively obvious downward trend.

The suppressive effect of the 200 day moving average (SMA): Silver prices have attempted to break through the $30.00 mark multiple times recently, but have not been successful, indicating strong resistance from the 200 day moving average. From a technical perspective, the rebound momentum of silver has encountered resistance at this critical level, further confirming the dominant position of bears in the current market.

Technical indicators: The current RSI of silver is below 50, and the fast and slow lines of MACD are below the zero axis, indicating a bearish market sentiment in the short term. The oscillation indicator did not show any significant rebound signal, suggesting that prices are more likely to continue to decline in the short term.

Downward support: Silver has important support levels in the $29.40 area. If the price falls below this support level, it will further confirm the downward trend and target the $29.00 level. Further downward movement may extend to the $28.75-28.70 range, which is a several month low for silver and also a key technical support level. If the price effectively falls below this level, it may open up space to explore the $28.00 or lower level, and even continue the long-term downward trend since the high of $35.00.

Upward resistance: The $30.00 level is currently the main resistance level for silver and coincides with the 200 day moving average. If silver can effectively break through this resistance, it may usher in a short-term rebound market, with upward targets of $30.50 and $31.00 respectively. Further upward movement may test the $31.15-31.20 range, but overall, this requires strong fundamental support and technical buying to achieve.

Price pattern analysis: The recent price pattern of silver shows insufficient rebound momentum, and multiple attempts to break through key resistance have failed. In addition, the rebound in prices since hitting a several month low in December has been relatively small and has not formed a clear upward trend line, further indicating strong bearish forces in the market. If there is stronger selling pressure in the future, it may push silver further down.

Summary and Prospect

From the current fundamental and technical analysis, silver is facing significant pressure in the short term. The strength of the US dollar and the easing of inflation expectations are putting pressure on silver prices. From a technical perspective, the suppression of the 200 day moving average and the negative state of the daily chart oscillation indicator further confirm the bearish trend.

In the short term, if the price of silver falls below the $29.40 range, it may further explore the support level of $29.00 or even the $28.75-28.70 range. On the contrary, if the price can effectively break through the resistance of $30.00, it may trigger a short-term rebound market with a target range of $30.50 to $31.00.