Silver (XAG) Forecast: Bulls Eye $32 as Dollar Weakens and Fed Rate Cut Looms

Silver Prices Edge Higher as Bulls Target Key Resistance Levels

Silver prices are rising on Tuesday, driven by technical strength after breaking above the 50-day moving average and a short-term pivot point. The metal shows significant potential for further gains, with targets set at $31.76 and $32.52 based on current chart patterns.

At 11:20 GMT, XAG/USD is trading $29.77, up $0.32 or +1.09%.

Bullish Sentiment Prevails Despite Economic Concerns

Silver’s four-day rally continues even as concerns about a weakening Chinese economy and a drop in industrial demand persist. However, traders are focusing on the possibility of a Federal Reserve rate cut in September, alongside increased demand for safe-haven assets. A weaker U.S. dollar, which makes dollar-denominated assets like silver more attractive to foreign buyers, is also driving this upward trend. Additionally, silver’s rise is closely following gold’s recent surge to record highs, further supporting the metal’s momentum.

Dollar Weakness Supports Silver Prices

The U.S. dollar fell to a seven-month low on Monday and remained near that level on Tuesday, as traders anticipated an upcoming rate cut. This dollar weakness has provided strong support for silver and other commodities priced in dollars. The dollar’s decline also lifted the euro to its highest level this year, with other currencies like the British pound and emerging market currencies also benefiting.

Market participants are now focusing on Federal Reserve Chair Jerome Powell’s upcoming speech at Jackson Hole for clues about the Fed’s next move. The majority of traders expect Powell to indicate a rate cut, though opinions vary on whether it will be a standard 25 basis point cut or a more aggressive 50 basis point reduction.

Market Forecast: Bullish Outlook

With the current technical setup and supportive macroeconomic conditions, silver is likely to continue its upward movement in the near term. The combination of a weakening dollar, expectations of Federal Reserve rate cuts, and the metal’s strong chart pattern suggests that silver could reach its next resistance levels of $31.76 and $32.52. Traders should closely watch upcoming economic data and Fed communications, as these will play a crucial role in determining silver’s direction in the short term.

Technical Analysis

XAG/USD is edging higher on Tuesday after crossing to the bullish side of the 50-day moving average at $29.22. This level is new support. Additional support is being provided by a short-term pivot at $29.50.

After clearing these former resistance levels, it now appears that silver has a clean shot at the July 11 main top at $31.76 and the May 20 main top at $32.52.

A sustained move under the 50-day MA will signal the return of sellers.