Silver (XAG) Daily Forecast: Surging Solar Demand in China Pushes Prices 10% Higher Globally

Market Overview

Silver prices (XAG/USD) continued their upward momentum for the second consecutive day, trading around $31.18 on Friday. This surge follows the U.S. Federal Reserve’s decision earlier this week to cut interest rates by 50 basis points, a move designed to preempt inflationary pressures.

The rate cut has boosted demand for silver as investors seek safe-haven assets amid a softer U.S. Dollar and heightened economic uncertainty.

Silver’s Volatility After the Fed Rate Cut

Following the Fed’s decision on September 18, silver saw significant price swings. Initially, prices spiked to a new high of $31.20. During his press conference, Fed Chairman Jerome Powell emphasized the need to control inflation, downplaying concerns about a recession while highlighting the strength of the U.S. job market.

He also indicated that further rate cuts would be assessed on a case-by-case basis.

Despite the Fed’s measured stance, silver prices retreated nearly 5%, dropping to $29.70 as U.S. Treasury yields and the Dollar Index gained strength. However, in the following sessions, silver rebounded sharply, climbing back to $31.29. This illustrates silver’s enduring appeal as a hedge against economic instability.

China’s Strong Demand Boosts Silver Prices

A key factor supporting silver prices is the robust demand in China, where prices are nearly 10% higher than international rates. This premium is driven by China’s thriving solar panel industry and strong import activity.

The People’s Bank of China (PBoC) kept its one-year Loan Prime Rate (LPR) steady at 3.35%, further supporting economic stability and continued demand for silver.

Meanwhile, the Bank of Japan and Bank of England also maintained their interest rates at 0.15% and 5%, respectively, reflecting a global trend of cautious monetary policies.

Outlook: Economic Uncertainty and Silver’s Safe-Haven Appeal

With geopolitical tensions adding further complexity to the global outlook, silver remains an attractive safe-haven asset. As demand in China continues to rise and economic uncertainty persists, silver is well-positioned to maintain its upward trajectory.

Short-Term Forecast

Silver (XAG/USD) continues its bullish momentum, trading at $31.18. Strong support from robust demand in China and a weaker U.S. Dollar fuel its rally.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $31.18, up 0.83%, continuing its bullish momentum after bouncing off the pivot point at $30.99. Immediate resistance is found at $31.42, followed by $31.75, while support is seen at $30.62.

The 50-day EMA at $30.17 and the 200-day EMA at $29.32 indicate a strong upward trend, supporting silver’s recent gains.

With the bullish formation intact, any break above $31.42 could further propel silver toward $31.75. However, a decline below $31 might trigger a short-term selloff.