Silver Price Forecast: XAG/USD Holds $42 as Fed Rate Cut and Charts Signal Breakout
Silver rose on Monday to $42.27 as traders positioned for the US Federal Reserve’s policy meeting. Like gold, silver...
Quick overview
- Silver rose to $42.27 as traders anticipate the US Federal Reserve's policy meeting and a potential rate cut.
- Despite a stronger dollar, market sentiment remains optimistic about looser monetary policy supporting safe haven demand.
- Silver is currently in an uptrend, trading above key moving averages, with resistance at $42.45 and support at $41.46.
- Traders should be cautious of volatility ahead of the Fed's decision, as it could significantly impact silver prices.
Silver rose on Monday to $42.27 as traders positioned for the US Federal Reserve’s policy meeting. Like gold, silver is benefiting from expectations of a quarter point rate cut despite a stronger dollar that briefly capped the move. The US dollar index edged 0.1% higher making dollar denominated metals less attractive to foreign buyers.
Market sentiment is split between short term profit taking and optimism that looser monetary policy will support safe haven demand. Despite inflation data last week coming in above forecasts, analysts don’t think it will derail the Fed’s dovish stance. That’s keeping silver in the spotlight especially as industrial demand remains strong.
[[XAG/USD-graph]]
Silver (XAG/USD) Technicals
Silver is respecting an uptrend channel with higher lows. It’s trading above both the 50 period moving average at $41.21 and the 200 period moving average at $38.10. The strength of the trend is evident.
Key levels to watch:
- Resistance at $42.45: Breakout could target $42.85 and $43.25.
- Support at $41.46: Failure to hold here could see a move to $40.89.
- RSI at 67: Overbought but no bearish divergence.
Candlestick patterns are also hinting at a turning point. A bullish engulfing candle pushed prices higher but small bodied spinning tops are now showing hesitation at resistance. Traders should watch for a “three white soldiers” pattern for continuation or a shooting star for reversal.
Silver Trade Setup
For active traders the setup is clear. Aggressive buyers can enter at $41.90 with stops at $41.20 for $42.85 and $43.25. Conservative traders may want to wait for a confirmed break above $42.45 before committing.
With the Fed decision looming volatility could be high. A dovish rate cut could fuel the next leg higher, a hawkish surprise could see a pullback. Either way silver is the market to watch this week as technicals converge with fundamentals.
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