Silver Finishes Above All Four Pivots and the 50-Day MA, Setting Up a Strong Monday Opening
On Friday, the market finished above all four pivots, giving it an upside bias. Spot Silver also ended the session on the strong side of the 50-day moving average at $81.72. Combining the two indicators puts the market in a strong position ahead of Monday’s opening.
$86.32 Is the Next Target — A Breakout Could Open the Door to $92 and Beyond
The close over both the 50-day MA and the 50% level has put the market in a position to challenge the swing top at $86.32. If taking out this level creates enough upside momentum, we could see a surge into the February 4 swing top at $92.20, followed by a major retracement zone at $92.87 to $99.66.
Iran Tensions, Supreme Court Ruling and New Tariffs Underpin Friday’s Rally
Fundamentally, Spot Silver was underpinned by three factors: the threat of a war between the United States and Iran, the Supreme Court’s ruling that struck down President Trump’s emergency tariff powers, and his announcement of a new 15% global tariff. Perhaps putting a lid on Friday’s rally was a drop in the chances of a 25-basis-point rate cut by the Federal Reserve in June.
Tariff News Overshadows the Fed — but That Narrative Won’t Last Long
On Friday, the Supreme Court and new tariff news overshadowed economic data that dampened the chances of a Fed rate cut. I think this was a kneejerk reaction by silver traders and that over time, traders will drift back toward the rate cut narrative.
The Supreme Court ruling and the Trump administration’s response were largely in line with expectations. The most important takeaway, in my opinion, was that it lifted an overhang that may have been weighing on some traders. However, it does open the door to additional issues down the road, including how any refunds will be delivered, for example. Additionally, these measures are likely to be litigated in court, which could take years. My best guess is that the tariff issue will quickly fade as a factor driving silver prices. It’s better to focus on Fed policy.
Weak GDP, Sticky Inflation and a Strong Labor Market Keep June Rate Cut Odds Below 50%
Weak GDP data and sticky inflation are the two key issues driving the Fed rate cut story right now. You can throw in stronger-than-expected labor market data too. We can look at a lot of input factors, but the bottom line is there is currently a less-than-50% chance of a June rate cut, according to the CME FedWatch Tool, which stands at 44%.