Spot silver fluctuated narrowly around $29.6 on Tuesday (January 14th), with a intraday increase of approximately 0.37%. Previously, silver prices rebounded slightly in the previous trading day and are currently testing the resistance level of $29.83 at the 14 day moving average (EMA), approaching the critical psychological level of $30. The market sentiment remains neutral, and the direction in the short term is still unclear.

Market Dynamics and Analysis

According to the latest market data, silver prices are attempting to repair some of the previous declines. On the 14th, the relative strength index (RSI) remained around 50, indicating that the current market is in a state of equilibrium, with no obvious overbought or oversold signals. The daily chart shows that silver prices are between the 9-day and 14 day index moving averages, indicating a relatively neutral short-term price momentum. If the price can break through the dual resistance levels of $29.83 and $29.84, it may enhance market confidence and push the price to test the $30 mark or even higher.

From the perspective of downside risk, the initial support level for silver is at $28.74, which is the four month low set on December 19 last year. If it falls below this level, it may trigger greater selling pressure, further pointing towards the key psychological level of $28. The acceleration of the downward trend may threaten market confidence and lead to more technical selling.

Fundamental driving factors

The uncertainty of global macroeconomics continues to have an impact on the precious metal market. The hawkish policy expectation of the Federal Reserve still dominates the market sentiment. Although the yield of US treasury bond bonds has recently fallen from a one-year high, the strong background of the US dollar still suppresses the rising potential of silver prices. In addition, the recent strong performance of the US non farm payroll report has strengthened market expectations for the Federal Reserve to slow down the pace of interest rate cuts. These factors provide support for the US dollar while putting some pressure on silver prices.

On the other hand, the US Producer Price Index (PPI) data is about to be released, and the market will closely monitor its guidance on the inflation outlook. If PPI data shows weakness, it may provide short-term support for silver prices. However, overall, investors appear cautious before the release of key economic data this week, which is also an important reason for the limited volatility of silver prices in recent times.

The linkage impact of the gold market

The gold market is also affected by similar fundamental factors, although the gold price recorded a slight increase during the day, it has not yet broken through the key level of $2700. The interconnectivity of the gold and silver markets indicates that if gold prices fail to maintain their current upward trend, the upward movement of silver may be limited. Meanwhile, the technical support zone for gold ($2657-2635) may indirectly provide a reference range for silver prices.

Market outlook

From the current technical and fundamental situation, silver prices may continue to fluctuate in the short term, and it is necessary to closely monitor the resistance breakthroughs at $29.83 and $30. If it can hold steady at $30, silver is expected to further challenge the two month high of $32.28. However, downside risks still exist, especially if they fall below the support level of $28.74, which could trigger further pullbacks.

Overall, the direction of the market may need to wait for further guidance from more economic data this week.