Silver Price Forecast: Can $39 Breakout Signal the Next Rally Toward $40?
Silver (XAG/USD) is at $38.84, down 0.54% today, as strong US data boosted the dollar and weighed on metals.
Quick overview
- Silver (XAG/USD) is currently priced at $38.84, down 0.54% due to strong US economic data boosting the dollar.
- Despite today's pullback, the outlook for silver remains positive with an 85% probability of a September rate cut by the Fed.
- Technical analysis shows silver is consolidating in an ascending triangle, indicating potential bullish momentum.
- Traders are advised to consider buying above $38.70, with a break above $39.11 potentially leading to further gains.
Silver (XAG/USD) is at $38.84, down 0.54% today, as strong US data boosted the dollar and weighed on metals. After silver’s big move up this week, breaking above the $38.70 pivot and testing $39.11 resistance, today’s pullback is not a surprise. But the bigger picture remains supportive with expectations of a September rate cut which could get metals moving again.
Data from the Bureau of Economic Analysis showed the US economy grew 3.3% in Q2, beating estimates of 3.1%. Weekly jobless claims also fell to 229K, showing labor market strength. While this reduces near term safe-haven demand, it also highlights the Fed’s balancing act: managing inflation while protecting growth.
Fed Bets Keep Metals Supported
The market is pricing in a 25-basis-point September cut with an 85% probability. Fed comments reinforced the dovish tilt. Governor Christopher Waller said he’s supportive of near-term cuts and New York Fed President John Williams said easing is likely but data dependent.
For silver, lower rates reduce the opportunity cost of holding non-yielding assets, making it more attractive to investors looking for a hedge against policy and inflation uncertainty.
Key drivers:
- Fed cut bets: 85% chance of September cut
- US growth: 3.3% Q2 GDP, better than expected
- Inflation watch: 2.6% headline PCE, 2.9% core
Silver Technicals Point to Breakout
On the charts, silver is consolidating inside an ascending triangle which often resolves in favor of the bulls. The 50-period SMA at $38.70 is support, and higher lows suggest dip buying is intact. Momentum indicators back this up: the RSI is cooling from overbought and the MACD has flipped positive, suggesting bullish momentum is stabilizing.
Candlesticks show long lower shadows on the recent pullbacks, so buyers are stepping in at support. A break above $39.11 would target $39.52 and $39.97, the previous highs. Below $38.70 and it’s $38.17 or $37.55.
For traders, it’s simple. Buying above $38.70 is good risk-reward, and a clean break above $39.11 could trigger momentum to $40. With the Fed pivot coming up, silver may be getting ready to move again.
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