Silver (XAG) Forecast: Bulls Target $32 After Fed’s Rate Cut Lifts Sentiment

Silver Poised for Further Gains After Fed’s Rate Cut

Silver prices are showing strength on Thursday, rebounding from a volatile Wednesday session that saw prices dip to $29.71 before recovering. The precious metal’s rally comes in the wake of the Federal Reserve’s larger-than-expected interest rate cut, which has weakened the U.S. dollar and bolstered the appeal of dollar-denominated assets like silver.

At 11:35 GMT, XAG/USD is trading $30.74, up $0.98 or +3.29%.

Fed’s Bold Move Sparks Market Optimism

The Federal Reserve delivered a substantial 50-basis-point rate reduction on Wednesday, surpassing the typical 25-basis-point adjustment. Fed Chair Jerome Powell emphasized that this decision reflects the central bank’s commitment to maintaining low unemployment rates in light of easing inflation pressures. Despite the rate cut, Powell assured that the economy remains robust, citing stable job market indicators and a current unemployment rate of 4.2%.

Market Reaction and Future Expectations

Traders are closely monitoring the implications of the Fed’s decision, with the CME FedWatch tool indicating a 65% probability of a 25-basis-point cut at the Fed’s November meeting and a 35% chance of another 50-basis-point reduction. This dovish stance from the Fed typically favors precious metals like silver, which become more attractive in lower interest rate environments.

Geopolitical Tensions Add Support

Adding to silver’s appeal as a safe-haven asset, geopolitical tensions in the Middle East have escalated. Recent explosions linked to Hezbollah in Lebanon have raised concerns about potential wider conflicts in the region, further supporting precious metal prices.

Short-Term Market Forecast

 

The outlook for silver appears bullish in the short term. With prices currently consolidating near Wednesday’s closing levels, a breakout above $31.30 could pave the way for testing significant resistance levels at $31.76 and $32.52. Softening economic data and ongoing geopolitical uncertainties are likely to act as catalysts for higher silver prices.

Investors should closely monitor upcoming U.S. economic data, particularly the initial jobless claims report due at 12:30 GMT, for further clues on the precious metal’s trajectory. Given the current market conditions and the Fed’s accommodative stance, silver is well-positioned to continue its upward momentum in the coming sessions.