Silver (XAG) Forecast: Silver Rallies as Waller Comments Pressure Rate-Hike Odds

Silver Ran When Waller Broke the Rate-Hike Trade

Spot silver climbed through mid-session Thursday after Fed Governor Christopher Waller gave the bond market its first reason in a week to back away from the September rate-hike trade. The dollar fell. Treasury yields eased. Gold ran more than $100. Silver followed and did not wait long.

At 17:13 GMT, Spot Silver (XAGUSD) is trading at $67.05, up $1.72 or 2.64%. The market traded between $65.21 and $67.47.

Daily Spot Silver (XAGUSD) Technical Analysis

Spot silver is sharply higher in mid-session trading Thursday after confirming Wednesday’s closing price reversal bottom at $63.31. The bottom was posted just ahead of an intermediate 50% level at $62.98, the 50-day moving average at $61.84 and 50% of the all-time high at $60.835.

The short-term range is $71.18 to $63.31. Its retracement zone is $67.25 to $68.17. Thursday’s rally was strong enough to reach $67.47, which was just inside the zone.

Trader reaction to the zone is likely to determine the near-term direction of XAGUSD. A sustained move over the 61.8% level at $68.17 will be a sign of strength. This could trigger an acceleration to the upside, with the next major objectives a long-term 50% level at $72.08 and the 200-day moving average at $72.67.

The inability to overcome the 50% level at $67.25 will signal the presence of weak buying or stronger selling. If this move creates enough downside momentum, we could see a sharp correction into $63.31, $62.98 and the 50-day moving average at $61.84.

The main trend is up. The main bottom at $62.56 held. Now it is up to buyers to take out the swing top at $71.18 to reaffirm the uptrend and create enough upside momentum to overtake the 200-day moving average at $72.67.

Three Fed Voices and Two of Them Pushed Back

Warsh said at Jackson Hole last week that policymakers could have more work to do if inflation did not move toward target. Yields rose to multiyear highs on that message. The dollar reached a nearly three-week high. Gold and silver spent four sessions under pressure.

Waller gave traders a different read Thursday. He said he would lean toward holding rates steady at the mid-September meeting if the next two weeks of inflation data continue to improve. He still called inflation meaningfully above the Fed’s 2% target. He also said recent readings show disinflation is making progress and the Committee can afford to wait one meeting. Rate-hike odds fell from the low-60% area toward 50%.

New York Fed President John Williams added to the shift. He said inflation is still easing as tariff effects fade and higher energy costs have not yet spread broadly through services. Two Fed officials in one session questioning the hike trade after a week where nobody at the central bank had pushed back against Warsh.

The Dollar and Yields Gave Silver Room to Move

The dollar had been doing most of the damage to silver all week. The 10-year Treasury yield had been climbing toward levels last seen in late 2023. Thursday the dollar index backed off from its nearly three-week high. The 10-year eased. Silver was stretched enough after four days of selling that a pause was all it needed.

Gold was up more than $100 and holding above $4,480. Silver followed. The metals complex turned together once the two trades that had been sitting on top of the haven bid stepped aside.

Oil Near Six-Week Highs Is Still Part of the Trade

Crude remains near six-week highs as the U.S.-Iran conflict widens around the Strait of Hormuz. Missiles and drones targeted U.S. positions in Kuwait, Jordan and Bahrain this week. Israel renewed threats against Iranian energy infrastructure.

Waller said the Fed can look through higher energy costs if they stay contained in oil and gasoline and do not spread into broader services prices. That is a big condition while the Gulf conflict is still expanding. Crude near these levels and services prices still climbing are sitting on the other side of Waller’s argument.

Silver has not been trading the Middle East haven bid as directly as gold. It is there underneath. The rate trade had been stronger than the haven trade all week. Thursday was the first session where it eased enough for silver to use it.

What to Watch

Friday’s payrolls number runs the silver trade from here. Waller pushed back against the hike trade Thursday and the dollar and yields both gave ground. Silver is trading his willingness to wait. A soft jobs number is the one that keeps the repricing going. Anything firm with stronger wages and Warsh’s Jackson Hole message takes the tape back.

The near-term read stays bullish while silver holds above $67.25. The retracement zone at $67.25 to $68.17 is where the rally landed Thursday and getting through $68.17 opens the long-term 50% level at $72.08 and the 200-day at $72.67. The $67.25 pivot is the level that matters on the downside. Losing it puts $63.31 and the 50-day at $61.84 back in play. Wednesday’s reversal bottom says buyers showed up at the value zone. Thursday confirmed it. Friday’s number decides whether they stay.

More Information in our Economic Calendar.