Silver (XAG) Forecast: Will Powell’s Speech Spark a Rally Beyond $30?

Silver Prices Edge Higher Amid Market Uncertainty

Silver prices are inching upward on Friday, recovering slightly from Thursday’s sharp decline. This movement comes as traders cautiously await Federal Reserve Chairman Jerome Powell’s speech at 14:00 GMT, expected to significantly impact market sentiment.

At 10:58 GMT, XAG/USD is trading $29.44, up $0.46 or +1.57%.

Recent Price Action and Market Factors

After reaching a one-month high of $29.97 on Tuesday, silver has retraced nearly 2% this week. The pullback is attributed to a stronger U.S. dollar and rebounding Treasury yields, following an unexpected rise in the unemployment rate. Despite these headwinds, silver’s slight uptick on Friday reflects ongoing investor uncertainty.

Federal Reserve Expectations

Market participants will be closely monitoring Powell’s address at the Jackson Hole symposium for insights into future interest rate decisions. Traders have priced in a 76% probability of a 25-basis-point rate cut in September, with some speculating on a more substantial 50-basis-point reduction. This anticipation has maintained silver’s appeal, as lower interest rates typically support non-yielding assets.

Potential Speech Scenarios and Market Implications

Dovish Stance

If Powell adopts a dovish tone, emphasizing economic challenges and the need for monetary support, silver could see a significant rally. This scenario might push prices toward the recent high of $29.97 or even beyond the $30.00 psychological barrier. Traders should watch for increased buying pressure and potential short-covering in this case.

Neutral Stance

A balanced approach from Powell, acknowledging both economic improvements and ongoing risks, could lead to short-term volatility in silver prices. This scenario might result in range-bound trading between $28.22 and $30.00 as the market digests the implications of a steady monetary policy.

Hawkish Surprise

An unexpectedly hawkish tone, suggesting that the economy is stronger than anticipated and rate cuts may be delayed, could trigger a sharp selloff in silver. This scenario might push prices below the pivot price recent support level of $28.22, potentially retesting $26.47. Traders should be prepared for increased volatility and possible stop-loss triggering.

Technical Considerations

Traders should note the potential formation of a bearish closing price reversal top on the weekly chart if silver ends the session lower today. This pattern could signal a deeper correction, particularly if combined with hawkish comments from Powell.

Market Forecast

The short-term outlook for silver remains cautiously bullish, but with significant event risk tied to Powell’s remarks. A dovish or neutral stance could support prices, potentially challenging the $30.00 level again. However, traders should be prepared for heightened volatility and the possibility of rapid price swings in either direction.

Key levels to watch include resistance at $29.97 (recent high) and $30.00 (psychological barrier), with critical support at $28.22. Traders are advised to manage risk carefully given the potential for volatile market moves following Powell’s speech.