Dual signals in the market... Between expectations of interest rate cuts and technical adjustments

ZenZKPlayer · 2026-01-06T15:46:34+00:00

Silver prices are currently stabilizing around $52.80 after a strong increase. Despite a strong labor market suggesting stability, the market anticipates an interest rate cut, influencing a weaker dollar and boosting silver's appeal. Experts predict potential further gains toward $85, with the recent price dip seen as a temporary adjustment rather than a trend reversal.

ZenZKPlayer

2026-01-06 15:46:34

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Focus on the Continuation of Medium-Term Uptrend Amid $52 Rebound… Distance to $85 Target Remains

Despite a decrease of 216,000 in initial jobless claims, the December rate cut probability exceeds 84%… Paradoxical market sentiment
Speculation about low-interest-rate-oriented candidates for the next Fed chair strengthens the dollar-weakening trend
XAG/USD shows a short-term correction but fundamentals remain bullish… Continued buying interest

XAG/USD( has recently stabilized at the spot) price. After a strong rally over the past three days, it is now correcting around $52.80 per ounce, but the underlying market sentiment remains robust. While a short-term technical correction is underway, some experts suggest that further upside toward the $85 level cannot be ruled out.

The Paradox of Economic Indicators… Strong Employment Market Signals Rate Cuts

Recently, US labor market data has been more resilient than expected, yet the market remains strongly confident in easing monetary policy. According to the US Department of Labor, initial jobless claims last week totaled 216,000, significantly below the forecast of 225,000. This is a decrease of 6,000 from the previous week, indicating stability in the employment sector.

Typically, strong economic data would suggest a likelihood of rate hikes, but this time the situation is different. CME FedWatch’s rate futures market data shows that the probability of a 25bp rate cut in December exceeds 84%. Considering that just 10 days ago the probability was around 30%, the market has rapidly increased its bets on rate cuts. This reflects a market consensus that preemptive easing is inevitable amid signs of economic slowdown.

Fed Chair Candidate Speculation and the Strengthening of the Dollar-Weakening Trend

Changes in policy expectations are also supporting gold prices. It has been reported that Kevin Hasset, a member of the National Economic Council, is among the final candidates being considered for the next Fed chair by the Trump administration. Hasset is expected to faithfully follow the current administration’s low-interest-rate and dollar-weakening policies, which deepens expectations for more aggressive and faster easing measures.

Such policy expectations have led to a weakening of the dollar in the forex market. The US Dollar Index(DXY) has declined for three consecutive trading days, falling below 99.50. A weaker dollar reduces the opportunity cost for non-dollar investors to buy silver and can accelerate the inflow of global funds seeking currency arbitrage profits, acting as a positive factor.

Interpretation of the Short-Term Correction… Likely to Rebound After Adjustment

The retreat to the mid-$52 range is interpreted as profit-taking following recent rapid gains. However, the limited depth of the decline is noteworthy. Market participants are viewing this as a simple correction phase, with positioning adjustments ahead of the December FOMC meeting. As the scenario of rate cuts becomes more likely, additional declines could attract new buying interest. Considering this supply-demand dynamic, the medium- to short-term upside potential for silver prices appears to outweigh downward pressures.

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