Silver (XAG) Forecast: Bullish Run Continues as Traders Eye Multi-Year High at $34.35

Silver Hits Yearly High, Eyes Multi-Year Peak

Silver prices surged to a high of $32.72 on Thursday, surpassing the previous yearly top of $32.52. This renewed bullish momentum places the multi-year high of $34.35 within reach if the current trend continues. Investors are closely watching for any signals that could push the metal higher, especially as silver moves further away from the 50-day moving average, increasing concerns of potential volatility.

At 12:17 GMT, XAG/USD is trading $32.36, up $0.55 or +1.74%.

Silver Gains Momentum on Interest Rate Speculation

The silver market’s recent strength has been largely driven by growing expectations of another U.S. interest rate cut. Investors await Federal Reserve Chair Jerome Powell’s remarks later today for more clarity on future policy. After the Federal Reserve’s recent 50 basis point rate reduction, which brought the benchmark rate down to 4.75%-5.00%, markets are now pricing in a 62% chance of another 50 bps cut in November, according to the CME FedWatch Tool.

Lower interest rates improve the appeal of non-yielding assets like silver, contributing to the ongoing rally. Despite the strength in the U.S. dollar and rising Treasury yields, silver prices continue to rise, driven by speculative flows.

Economic Data and Fed Policy in Focus

Traders are not only focused on Powell’s address but are also awaiting key U.S. economic data, including weekly jobless claims and Friday’s core personal consumption expenditure (PCE) index—the Fed’s preferred inflation measure. These data points will provide further insight into the Federal Reserve’s approach to managing inflation and could impact silver prices. Additional comments from other key Fed officials, including New York Fed President John Williams and Vice Chair for Supervision Michael Barr, are also expected today.

Silver’s Strong 2024 Performance

Silver has gained more than 30% so far in 2024, supported by U.S. rate cuts, safe-haven demand, and strong central bank buying of gold. Geopolitical uncertainties have also fueled silver’s rally, with demand continuing to rise as investors seek safer assets. We believe silver could continue to rise towards $35 per ounce in the coming weeks, provided no major setbacks occur.

Short-Term Market Forecast

In the short term, silver is poised to extend its gains, with the possibility of reaching $35 per ounce if the Federal Reserve signals further rate cuts. However, profit-taking could occur as the year ends, especially if silver moves into overbought territory.

We project an average price of $31.76 for Q4 2024, as the market may see some short-term corrections after the strong performance throughout the year. Traders should remain cautious of heightened volatility as silver moves further away from key technical levels.