Silver (XAG) Price Surges to $31.20 Amid Fed Rate Cut and Geopolitical Tensions

Silver (XAG/USD) continued its bullish rally for the second straight day, trading around $31.20 on Friday. This rise comes in the wake of a significant 50 basis point rate cut by the U.S. Federal Reserve earlier this week.

The Fed’s decision to lower rates was aimed at curbing inflation, which immediately fueled demand for safe-haven assets like silver.

While silver initially jumped to $31.20 following the news, comments from Fed Chair Jerome Powell triggered a brief decline, pushing prices down by nearly 5% to $29.70.

However, silver quickly rebounded, demonstrating its continued appeal amidst market uncertainty.

Powell emphasized that further rate cuts would be evaluated on a case-by-case basis and downplayed concerns of a near-term recession.

This cautious optimism supported the U.S. Dollar and U.S. Treasury yields, briefly dampening silver’s upward momentum before it surged again.

After Fed's rate cut, gold price hit record level
Gold and silver prices up around 1% on Friday following Fed's rate move#News #DailyNews #LiveNews #WorldNews#World pic.twitter.com/sVJTWC8E1N

— Breaking News (@FastNews77) September 20, 2024

Geopolitical Tensions Propel Safe-Haven Demand

In addition to the Fed’s monetary policy actions, escalating geopolitical tensions in the Middle East are bolstering silver prices.

Recently, Israeli warplanes launched their most intense strikes on southern Lebanon in nearly a year, raising fears of a wider conflict in the region.

These tensions are pushing investors to seek out safe-haven assets, with silver emerging as a key choice.

The rising geopolitical risks are adding a premium to silver’s price as market participants look to hedge against potential global instability.

Alongside this, the White House and other international governments are calling for immediate diplomatic solutions, but concerns remain high as conflict continues to escalate.

Chinese Demand Boosts Silver Prices

Meanwhile, silver prices in China are roughly 10% higher than global rates, driven by strong demand from the country’s booming solar panel industry and robust import activity.

China’s economic conditions, supported by the People’s Bank of China’s (PBoC) steady Loan Prime Rate at 3.35%, continue to sustain this demand.

While the Bank of England and the Bank of Japan have maintained their interest rates, China’s industrial sector remains a vital pillar for silver demand, contributing to its price gains.

Given these factors, silver’s safe-haven appeal remains strong, and rising demand from China further solidifies its upward momentum.

Silver jumps over 2%, boosted by Fed rate cut.#preciousmetal #investment #trade pic.twitter.com/RVNa2eKW8o

— MinsFx (@MinsFX_) September 20, 2024

Technical Outlook: Key Levels for Silver (XAG/USD)

Silver (XAG/USD) is trading at $31.28, holding onto its bullish momentum within an ascending channel. Immediate resistance is seen at $31.77, with the next key levels at $32.36 and $33.03.

On the downside, support is found at $30.77, followed by $30.22 and $29.24.

• Support Levels: $30.77, $30.22, $29.24
• Resistance Levels: $31.77, $32.36, $33.03
• 50-Day EMA: $30.22 offers solid support, indicating the bullish trend remains intact.
• RSI at 64.62: Signals room for further gains but hints at potential consolidation due to overbought conditions.

Silver remains poised for more upside, but traders should watch for a possible pullback in the near term.