Silver (XAG) Forecast: Silver Market Awaits Rate Cut Catalyst for 50-Day MA Break

Silver Edging Higher but the 50-Day Moving Average Is Still the Test

Spot Silver (XAGUSD) is edging higher Thursday but the breakout over the 50-day moving average at $78.76 still hasn’t materialized. That’s the reminder that chart points don’t move markets. Buyers with new money do.

Yields and Dollar Are Pulling in the Same Direction

Spot Silver is trading at $79.69, up $0.72. The 10-Year U.S. Treasury yield is holding near 4.28% while short-term yields edged lower. That’s the market pricing in a Federal Reserve that has more flexibility than it did a month ago. Lower yields reduce the cost of holding silver. Buyers respond to that directly.

The U.S. Dollar Index is near recent lows despite a small bounce. Optimism around a potential U.S.-Iran deal is keeping pressure on the dollar. When the dollar drops, silver gets cheaper for everyone outside the U.S. and that demand shows up in the price. Both the 10-Year U.S. Treasury yield and the dollar are moving in silver’s favor right now. That’s not a coincidence. When yields fall and the dollar weakens at the same time, precious metals get a double tailwind.

Jobless claims are holding relatively low and industrial production is expected to grow modestly. The economy is running steady but not overheating. That’s exactly the backdrop that keeps rate cut expectations alive. A Fed that doesn’t need to stay aggressive is a Fed that gives silver room to move. As long as the 10-Year U.S. Treasury yield and the U.S. Dollar Index stay under pressure, silver stays supported. The 50-day moving average at $78.76 is still the line. Clear that with conviction and the next leg higher opens up.

Technical Outlook

Nonetheless, the 50-day moving average is controlling the near-term price action. A sustained move over the indicator will signal the presence of buyers with a major 50% level at $83.61 the first upside target. This level is both resistance and a potential trigger point for an acceleration to the upside with the major target a resistance zone at $91.34 to $98.49.

A sustained move under the 50-day moving average will indicate the return of sellers. The first downside target is a 61.8% level at $74.63. This is followed by a short-term retracement zone at $71.01 to $68.65.

The 50-day and 200-day moving averages are indicating uptrend and so is the minor swing chart. The problem is with the main trend tops at $90.02 and $96.43. I think that overcoming those levels will be the key to an extended rally unless there is another meaningful break to $71.01 to $68.65. This move will bring a new main top closer to the action and at a more favorable price level. However, this move takes time to form.

More Information in our Economic Calendar.