Silver rebounds to near $49.00 during the late Asian trading session on Wednesday after the white metal attracted bids around the fresh two-week low at $47.53 earlier in the day.
XAUUSD has declined almost 12% since Friday’s all-time high around $54.50, when investors became confident that the US and China would reach a trade deal soon.
US President Donald Trump has been expressing confidence that Washington and Beijing will reach a fair deal after his meeting with Chinese leader Xi Jinping later this month in South Korea. However, Trump warned on Tuesday that a meeting with Xi might not take place.
“So now we’re going to have a fair deal, and I think we’re going to have a very successful meeting,” Trump said on Tuesday, but later added, “maybe it won’t happen. Things can happen where, for instance, maybe somebody will say, ‘I don’t want to meet. It’s too nasty’. But it’s really not nasty,” Yahoo News reported.
Signs of uncertainty over global trade often increase demand for safe-haven assets, such as silver.
Meanwhile, the broader outlook for the white metal remains upbeat as the Federal Reserve is almost certain to cut interest rates in its policy meeting next week. Lower rates by the Fed bode well for non-yielding assets, such as silver.
Ahead of the Fed meeting, investors will focus on the delayed US Consumer Price Index (CPI) data for September, which will be released on Friday.
Silver daily chart by TradingView
Meanwhile, gold saw a sharp correction of 8.6% from its all-time high of $4,381 on Monday, to a current intraday low of $4,004 on Wednesday, its steepest drop since August 2020, according to MarketPulse analyst Kelvin Wong.
He said that the medium-term uptrend for XAUUSD remains intact, supported by a sustained downtrend in the 10-year US Treasury real yield below 1.87%.
“Gold has experienced a volatile movement in the past three sessions. The precious yellow metal has managed to reverse the 1.7% loss it incurred last Friday, October 17, and rallied by 2.4% on Monday.
“Thereafter, gold recorded a swift decline on Tuesday, where it tumbled by 6.3% on an intraday basis, but it pared back some losses to close at $4,125 with a daily loss of -5.3%, likely due to stop-losses triggered on short-term leveraged long positions on XAUUSD.
“Interestingly, longer-term technical elements and one key macro factor are still suggesting that the medium-term and major uptrend phases of gold remain intact,” Wong concluded, explaining that a lower long-term US real interest rate acts as a tailwind for gold.
“Based on intermarket analysis, a cap on any further rebound in the 10-year US Treasury real yield below 1.87% and a break below 1.66% key intermediate support reduces the opportunity costs of holding gold as it is a non-income-bearing asset, in turn, creating a further positive feedback loop back into the price actions.”
(Source: OANDA)
