Silver (XAG) Forecast: Eyes on Powell’s Speech as Silver Hovers Near Monthly Peak

Silver Prices Near One-Month High as Fed Signals Rate Cut

Silver prices are moving lower on Thursday, close to a one-month peak reached earlier this week. This movement follows the release of Federal Reserve meeting minutes, which showed strong support for an interest rate cut at the September policy meeting. Lower interest rates typically boost silver prices by reducing the cost of holding non-yielding assets.

At 11:34 GMT, XAG/USD is trading $29.52, down $0.08 or -0.28%.

Market Response to Fed Minutes

Investors seemed unsurprised by this development, having factored in the potential move for weeks. The silver market remains above the 50-day moving average support but needs a catalyst to break decisively past the $29.50 pivot point. This technical position suggests potential for further gains if additional positive factors emerge.

Treasury Yields and Dollar Movement

U.S. Treasury yields increased on Thursday, with the 10-year yield rising over 2 basis points to 3.799%. This upward trend followed the release of dovish Fed minutes and a major downward revision in preliminary payroll data. At the same time, the U.S. dollar traded near year-long lows against major currencies like the euro and sterling. A weaker dollar often supports silver prices by increasing its appeal to international buyers.

Fed’s Stance and Market Expectations

The Federal Reserve’s July meeting minutes revealed that most participants favored easing policy at the next meeting if data continued as expected. This outlook has strengthened market expectations, with traders now pricing in a 66% chance of a 25-basis-point rate cut in September. The prospect of lower rates tends to increase silver’s attractiveness as an alternative investment.

Upcoming Economic Indicators

Attention now turns to Federal Reserve Chair Jerome Powell’s keynote speech at the Jackson Hole symposium on Friday. Key economic data releases, including weekly initial jobless claims, manufacturing and services PMI for August, and existing home sales data for July, will also provide insights into economic conditions. These indicators can affect silver prices by influencing expectations about economic growth and monetary policy.

Market Forecast

The short-term outlook for silver appears cautiously positive. The combination of a potentially accommodative Fed stance, weaker U.S. dollar, and current economic uncertainties could support precious metals prices. However, traders should watch for any unexpected statements in Powell’s upcoming speech or sudden changes in economic data, which could quickly alter market sentiment and silver prices.

Technical Analysis

XAG/USD is trading lower, but maintaining its strength by holding the 50-day moving average at $29.22 and straddling the pivot at $29.50. Building a support base on the strong side of the pivot could launch a rally into the targets at $31.76 to $32.52.

On the downside, a failure to hold the 50-day MA could trigger a break to $28.22. If the uptrend has been established then buyers are likely to re-enter on a move into this price.