Bond yields weaken while the won remains strong, approaching $52...ample technical upside potential

Accelerating Monetary Easing Cycle Drives Spot Silver

Spot silver(XAG/USD) continues its third consecutive trading day of strength this year, approaching the $52 per ounce mark. The key driver behind this rally is the market’s sudden expectation of additional rate cuts by the U.S. Federal Reserve(Fed). According to the Chicago Mercantile Exchange(CME) FedWatch tool, the market has increased the probability of a 25bp rate cut(to a target range of 3.50~3.75%) at the upcoming Federal Open Market Committee (FOMC) meeting next month from 50.1% a week ago to 85.3% now.

Falling bond yields are directly fueling the rise in silver prices. The U.S. 10-year Treasury yield is currently around 4.00%, but it has declined approximately 3.4% week-over-week, indicating a sustained bearish trend. For physical assets like silver, which do not generate interest income, falling bond yields reduce the relative opportunity cost, immediately turning investor sentiment toward buying.

Policy Leadership Shift Reinforces Easing Bias

Recent comments from New York Fed President John Williams further clarify the direction of monetary policy. In a Friday press briefing, he stated, “While the current stance remains restrictive, recent decisions have eased the tightening,” and “policy adjustments could be possible in the near term.” This suggests a growing dovish stance within the Fed.

Political factors also play a role. According to Bloomberg, former White House economic advisor Kevin Hasset is being considered as a potential successor to Chair Jerome Powell. These individuals, also linked to former President Donald Trump, are rumored to favor an early end to high-interest-rate policies if they join the Fed(FOMC), potentially acting as catalysts to accelerate the cycle of monetary easing in the medium to long term.

Technical Indicators: Upward Momentum Maintained, $54.50 as Key Resistance

On the daily chart, XAG/USD is currently trading around $51.94, positioned above the upward-sloping 20-day exponential moving average (EMA(EMA)). This indicates a solid short-term bullish trend. The Relative Strength Index (RSI(RSI)) stands at 59.15, above the neutral 50 level but below the overbought threshold of 70, suggesting room for further gains.

Support levels are identified at the $50.40 zone, where the 20-day EMA resides. If a short-term correction occurs but support holds at this level, a “rebound after correction” scenario is likely. The next key support is the $44.47 level, recorded on September 23, which is expected to serve as a medium-term critical support.

On the upside, the all-time high of $54.50 is expected to act as a strong resistance. Whether spot silver can break through this level will be crucial in determining the future trend. If RSI drops toward the 50 level, upward momentum may weaken, leading to a sideways trading range, with the support near the 20-day EMA becoming increasingly important.

Given the currently strong inverse correlation between bond yields and silver prices, close monitoring of Fed policy decisions and Treasury yield movements is essential.