Silver Price Forecast: $40.73 Surge Driven by Fed Cut Bets and Safe-Haven Rush
Silver (XAG/USD) followed gold’s lead during the Asian session on Wednesday, reaching $40.73. Investors are flocking...
Quick overview
- Silver (XAG/USD) reached $40.73 as investors seek safe havens amid trade tensions and expectations of a Fed rate cut.
- Traders are anticipating a 90% chance of a 25 basis point cut at the upcoming Fed meeting, which supports precious metals.
- Despite a strong rally, silver's upside is limited by the strength of the dollar, which is benefiting from weakness in other currencies.
- Technical indicators suggest caution, with traders advised to wait for a pullback before entering long positions.
Silver (XAG/USD) followed gold’s lead during the Asian session on Wednesday, reaching $40.73. Investors are flocking to precious metals as trade tensions, political uncertainty and expectations of a rate cut by the Fed soon.
The backdrop is favorable. According to the CME FedWatch Tool, traders are now pricing in over 90% chance of a 25 basis point cut at the September 17 Fed meeting. Markets are also pricing in at least two cuts by year end, which is good for silver and gold which thrive in low rate environment.
Adding fuel to the fire, President Trump is putting pressure on Fed Chair Jerome Powell and has gone after Fed Governor Lisa Cook, which is causing concerns over the central bank’s independence. With Trump pushing for an expedited Supreme Court ruling on tariffs, the uncertainty is causing safe haven flows into silver.
Dollar Strength Caps Upside
Despite the strong rally, silver’s upside is capped by the dollar’s strength. The dollar is up for the second day in a row, supported by weakness in the British pound and Japanese yen, both are facing fiscal and policy challenges.
While the dollar’s bounce has slowed down gold and silver, underlying demand for metals is firm as deficits are widening and central bank credibility is eroding.
US data this week will decide silver’s next move. Traders are watching JOLTS job openings, then ADP employment report and ISM Services PMI later in the week. The real test will be Friday’s Nonfarm Payrolls which will shift expectations for the Fed’s rate path and set the tone for metals into September.
Silver (XAG/USD) Technical Outlook and Trade Setup
Silver is holding at $40.84, inside a rising channel that has been guiding prices since last week’s breakout above $39.55. On the 2 hour chart, silver has built a clear pattern of higher lows, accumulation is steady. The breakout above $40.16 was confirmed by a strong bullish candle that looked like part of a three white soldiers pattern – a continuation signal.
But momentum is showing caution. RSI is above neutral but hinting at mild bearish divergence as price goes up while momentum flattens. MACD is positive but the histogram is shrinking, suggesting a cooldown before another push.Candles at $41.00 are spinning tops, showing hesitation at resistance. Support is at $40.16 and $39.93, 50-SMA is at $39.92. Upside targets are $41.74 and $42.36 if buyers can regain momentum.
For traders, the setup is to wait. A long entry on a pullback to $40.20-$40.00 with a stop below $39.90 is good risk reward. Initial targets are $41.74 and $42.36 if volume confirms the breakout.
Waiting for a bullish engulfing candle or higher low bounce near channel support adds conviction. In my view, silver’s structure is still bullish but chasing strength at resistance is poor entries—discipline matters here.
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