Silver sell-off targets $55.50

Silver prices have been under significant pressure throughout September and are now trading near $61.50 per troy ounce.

Further monetary tightening by the Federal Reserve remains the key burden for the precious metal. Following the September rate hike to 4%, Fed officials are still vigilant about persistent inflation risks. The market has already priced in a high probability of a similar move at the October meeting. But the likelihood of additional policy tightening before the end of the year is even more pronounced. At the same time, 10-year US Treasury bond yields have risen to levels not seen in nearly two decades, and the dollar index (DXY) has reached a two-month peak. A resilient greenback and elevated bond returns form a toxic mix, which dims the appeal of silver as a non-income-generating asset.

There are more headwinds for the precious metal. One of them is the energy crisis driven by ongoing geopolitical jitters between the United States and Iran. Brent prices have recently surged above $100 per barrel, fueling inflation risks and prompting the Fed to consider further monetary tightening—not what traders expected. This week, investors will be focused on the Personal Consumption Expenditures (PCE) index and fresh labor market data. Stronger inflation and employment data could boost expectations of a Fed rate hike, support Treasury yields, and put additional pressure on metal prices.

The final recommendation:

— Sell silver at the current price of $61.50, targeting $55.50 within one month.

— Place Stop Loss at $67.00 to manage risks if the market moves against us.