Silver (XAG) Forecast: Fed Rate Cut Sets Up Test of 2024 High

Silver Surges as Fed Rate Cut Fuels Precious Metals Rally

Silver prices reached their highest level since July 17 on Friday, propelled by gold’s record-breaking rally and the Federal Reserve’s recent interest rate cut. This surge in precious metals comes amid global economic uncertainties and a weakening U.S. dollar.

At 12:23 GMT, Silver (XAG/USD) is trading $31.41, up $0.63 or +2.05%.

Fed’s Aggressive Easing Boosts Silver

The Federal Reserve initiated its easing cycle with a substantial 50 basis point rate cut on Wednesday. Policymakers projected further reductions, including another half-point cut by year-end, a full point next year, and an additional half-point trim in 2026. These lower rates reduce the opportunity cost of holding non-yielding assets like silver, enhancing its appeal to investors.

Technical Analysis and Price Targets

Silver is currently finding support at $30.19 and $29.71. If the upward momentum persists, traders should watch for a potential surge towards the July 12 top at $31.76, followed by this year’s high of $32.52. Market analysts suggest silver could push towards $33.00 – $35.00 over the next 12 months, indicating a bullish outlook.

Factors Driving Silver’s Rally

Several factors contribute to silver’s positive performance:

1. U.S. dollar debasement
2. Precarious fiscal situations in Western nations
3. Global demand for independent store of value
4. Ongoing geopolitical tensions in the Middle East and Europe

Silver has risen over 31.89% so far in 2024, outperforming many other assets.

Global Economic Landscape

 

While silver benefits from the current market conditions, other economic indicators paint a complex picture:

• U.S. Treasury yields declined following lower-than-expected jobless claims
• The Bank of Japan maintained its benchmark interest rate at 0.25%
• China unexpectedly left its lending rates unchanged
• The yen weakened as the Bank of Japan signaled caution on further policy tightening

Market Forecast

The outlook for silver remains bullish in the short to medium term. The combination of Fed rate cuts, global economic uncertainties, and strong technical support levels suggest continued upward pressure on silver prices. Traders should monitor key resistance levels and global economic developments for potential entry and exit points. Additionally, traders should closely watch gold price action for guidance on silver’s movements.

However, investors should be aware of potential headwinds, such as reduced retail demand in price-sensitive Asian markets and shifts in central bank policies globally. The current “buy-the-dip” environment presents opportunities for strategic positioning in the silver market as we move into next week’s trading.