Silver Price Prediction: $39 Breakout Levels in Focus as Fed Cuts Loom
Silver’s recovery is gaining momentum as shifting Fed policy expectations keep demand for precious metals alive.
Quick overview
- Silver's recovery is supported by shifting Fed policy expectations, with an 87% chance of a rate cut in September.
- The US dollar's recent bounce may limit silver's upside, but the overall outlook remains positive for precious metals.
- Technical indicators show bullish momentum for silver, with a breakout above $38.50 and potential targets at $39.52 and $39.97.
- Falling interest rates and safe-haven demand could drive silver prices above $40 in the coming weeks.
Silver’s recovery is gaining momentum as shifting Fed policy expectations keep demand for precious metals alive. After Fed Chair Jerome Powell spoke dovish last week, markets are pricing in an 87% chance of a quarter-point rate cut in September, with nearly 50 basis points of easing by year-end. Lower interest rates reduce the opportunity cost of holding non-yielding metals like silver, making it more attractive as a safe-haven and inflation hedge.
The US dollar index bounced 0.2% on Monday after hitting a four-week low. A stronger dollar tends to cap silver’s upside, but the bigger picture still favors precious metals. Now investors are waiting for Friday’s US PCE inflation data to guide Fed policy and silver’s short-term direction.
Technical Landscape: Silver Eyes $39+
On the 2-hour chart, silver has broken out of the descending triangle, above $38.50 and consolidating just below $39.15 resistance. A bullish engulfing candle confirmed the breakout, after weeks of consolidation between $37.04 support and $38.22 resistance.
Momentum indicators are bullish. RSI is at 66, near overbought but still rising, showing buyers in control. MACD has printed a bullish crossover with expanding histogram bars – often a precursor to more upside. 50-period SMA at $37.97 is sloping up, confirming short-term momentum is aligned with the bigger picture.
Long lower shadows from recent sessions show buyers stepping in on dips around $37.50-$38.00.
Silver (XAG/USD) Price Levels and Trade Setup
Next level is $39.15. A clean close above this will likely open the way to $39.52, then $39.97 – the upper band of resistance on TradingView’s path projection. Failure to hold above $38.50 could see a pullback to $38.22, then $37.55 and $37.04.
For traders:
- Entry Trigger: Wait for a close above $39.15
- Stop-Loss Zone: Below $38.22
- Targets: $39.52 first, then $39.97 if momentum continues
If bulls hold, silver could go to $40+ in the next few weeks, with both technicals and dovish Fed on its side. For longs, falling rates and safe-haven demand could be the catalyst for silver’s next big move, making it both a hedge and a growth play in a wild market.
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