Silver (XAG) Forecast: Market Sentiment Turns Bullish on Fed Rate Cuts, Eyes on $32.52

Silver Prices Surge Amid Fed Rate Cut Expectations

Silver prices are climbing, with the market showing strong momentum as investors anticipate potential rate cuts from the Federal Reserve. The precious metal’s rally is supported by a weakening dollar and growing expectations of aggressive U.S. monetary policy easing.

At 11:37 GMT, XAG/USD is trading $30.95, up $0.23 or +0.75%.

Technical Analysis Points to Further Gains

The daily chart for silver reveals a clear upward path, with no significant resistance until the $31.76 level. A breakthrough above this price point could potentially trigger a move towards the yearly high of $32.52. On the downside, support levels are identified at $30.19 and $29.00, coinciding with a former top and the 50-day moving average, respectively.

Federal Reserve Meeting in Focus

Investors are closely watching the upcoming Federal Reserve meeting, scheduled for Tuesday and Wednesday. Market sentiment has shifted dramatically, with CME Group’s FedWatch tool indicating a 61% probability of a 50-basis-point cut, a reversal from previous expectations. This anticipation of monetary easing has boosted the appeal of non-yielding assets like silver and gold.

Economic Data and Global Central Bank Actions

The week ahead is packed with crucial economic releases, including August retail sales data and housing market indicators. These reports will provide further context for the Fed’s decision-making process. Additionally, the Bank of England’s impending interest rate decision adds another layer of complexity to the global financial landscape.

Supportive Factors for Silver Prices

Several factors are aligning to support higher silver prices:

1. A weakening dollar index, making silver more attractive to foreign buyers
2. Increasing safe-haven demand due to macroeconomic and geopolitical concerns
3. Anticipated lower interest rates, which typically boost precious metal investments
4. Potential for increased equity market volatility

Market Forecast: Bullish Outlook for Silver

Based on the current market conditions and expert analysis, the short-term outlook for silver appears bullish. ANZ analysts project gold prices to reach $2,700 in the near term and potentially hit $2,900 by the end of 2025. Applying this forecast to silver, we could see prices trading in the $35.00 to $37.00 range.

However, investors should remain cautious of potential headwinds, such as the recent slowdown in China’s industrial output and weakening retail sales. These factors could limit the upside potential in the short term.

In conclusion, silver’s upward momentum, coupled with anticipated Fed rate cuts and global economic uncertainties, presents a strong case for higher prices in the coming months. Traders should closely monitor the Federal Reserve’s decision and subsequent market reactions to gauge the strength of this bullish trend.