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Silver (XAG) Forecast: Bullish Setup Holds Into Fed Week — Is $44.22 the Next Target?
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Key Points:
- Silver rallied 2.93% last week, closing at $42.19 — its highest of the year — driven by Fed rate cut expectations.
- Markets now fully price in a 25bps Fed cut after weak labor data and a 911,000-job payroll revision stunned traders.
- LBMA vault inventories are shrinking fast, with analysts warning stocks could be depleted in just a few months.
Fed Rate Cut Bets Anchor Bullish Sentiment
Silver (XAG/USD) rallied 2.93% last week to settle at $42.19, marking its highest close of the year. The move was largely driven by heightened expectations that the Federal Reserve will cut interest rates by 25 basis points at its September 17 meeting.
Markets now fully price in that outcome following a string of weak labor data, including a dramatic 911,000-job downward revision to prior payrolls and a sharp rise in jobless claims.
While inflation came in slightly hotter than expected, the labor market’s rapid deterioration has taken precedence, pushing real yields lower and reinforcing investor appetite for precious metals.
Swing Traders Eyeing $44.22
The main trend is up according to the weekly swing chart with a near-term upside target of $44.22. The nearest swing chart support is a pair of bottoms at $36.96 and $36.21.
The long-term support is the 52-week moving average at $33.57.
Physical Supply Tightens as LBMA Vault Stocks Dwindle
Beyond monetary policy, physical market conditions are adding fuel to silver’s uptrend. London Bullion Market Association (LBMA) vault inventories have been declining steadily, and analysts now warn that if current demand levels persist — or accelerate — available stocks could be exhausted within months.
This tightening supply picture is not just a technical backdrop; it’s becoming a fundamental concern, particularly for industrial users and long-term investors seeking physical exposure. The looming scarcity has likely contributed to the urgency behind recent buying.
Industrial Demand From Green Energy Bolsters Long-Term Case
Silver’s role as a critical input in green technologies — particularly solar energy and battery storage — continues to support its industrial demand profile. Unlike gold, silver enjoys both monetary and industrial utility, and the clean energy transition is boosting the latter significantly.
As solar manufacturing scales globally and battery technologies become more widespread, silver consumption is expected to rise structurally over the coming years. This industrial underpinning is strengthening the bullish narrative and providing price resilience even in the face of short-term volatility.
Outlook: Bullish Momentum Into the Fed Meeting
With a fundamentally sound base built on dovish policy expectations, physical supply stress, and rising industrial demand, silver is entering the week with momentum.
The breakout above $42 has been supported by real drivers — not just speculative flow — and the path to a multi-year high near $44.22 remains open.
All eyes now turn to the September 17 FOMC decision. Barring a hawkish surprise, silver’s backdrop remains bullish, and traders should be prepared for further upside as macro and micro factors converge.
More Information in our Economic Calendar.
About the Author
James Hyerczykauthor
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
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