Silver (XAG) Forecast: $30.61 Breach Ignites Momentum, but Resistance Looms

Silver Edges Higher as Fed Rate Optimism Boosts Sentiment

Silver prices rose on Tuesday, supported by optimism over a potential U.S. Federal Reserve rate cut in December and a weakening dollar. The metal traded above a key pivot at $30.61, which sparked buying interest and short covering. However, the rally faces resistance levels that could limit gains in the near term.

At 13:05 GMT, XAG/USD is trading $30.82, up $0.31 or +1.02%.

Key Resistance and Support Levels

Silver’s upward movement faces resistance at $31.29, $31.54, and the 50-day moving average at $31.74. However, a sustained rally is unlikely unless the market closes above the 50-day moving average. On the downside, critical support lies at $29.68, with major support at the 200-day moving average of $29.19.

These technical levels are likely to guide silver’s short-term movements, especially in the absence of a clear breakout signal.

Fed Rate Cut Expectations Weigh on the Dollar

The market is increasingly pricing in a 73% probability of a 25-basis-point rate cut at the Federal Reserve’s December meeting, up from 66% on Monday. This sentiment followed comments from Fed Governor Christopher Waller, who expressed support for easing monetary policy due to inflation trends. UBS expects an additional 100 basis points of cuts through 2025, further enhancing the appeal of non-yielding assets like silver.

The benchmark 10-year Treasury yield, while ticking up slightly, remains near its lowest level since October, while the U.S. dollar fell 0.2%. These factors combined to make silver more attractive to investors seeking a hedge against economic uncertainties.

Geopolitical and Economic Factors Add Complexity

Silver continues to draw safe-haven demand due to geopolitical tensions, particularly in the Middle East. A U.S.-brokered ceasefire between Israel and Hezbollah faltered on Monday, adding to market uncertainty.

Investors are also closely monitoring key U.S. economic data, including job openings, the ADP employment report on Wednesday, and Friday’s payroll data. These reports will provide critical insights into the labor market and influence Fed policy expectations.

Market Forecast

Silver’s immediate outlook remains mixed. While rate cut expectations and a weaker dollar provide support, the metal needs to clear resistance levels to attract significant bullish momentum. Traders should watch the 50-day moving average at $31.74 as a potential breakout point, while downside risks are contained by strong support at $29.19.

More Information in our Economic Calendar.