Silver (XAG) Forecast: Fed Cuts Fuel Rally – Will $32 Resistance Break?

Silver Prices Rally Supported by Fed Rate Cuts

Silver prices are inching higher, with the XAG/USD trading at $30.84. This upward movement comes amidst fresh Chinese stimulus measures and growing expectations for additional Federal Reserve rate cuts.

Daily Silver (XAG/USD) Technical Levels

• Current minor support at former top of $30.19
• Additional support levels at $29.72 and major pivot at $29.50
• 50-day moving average serves as primary support

Fed’s Dovish Stance Fuels Silver’s Rally

Last week’s larger-than-expected 50 basis point interest rate cut by the Federal Reserve has been a key catalyst for silver’s recent rally. This reduction in rates enhances silver’s appeal to investors. Chicago Fed President Austan Goolsbee’s indication of potential further rate cuts in the coming year has bolstered the bullish outlook for silver.

China’s Stimulus Package: Double-Edged Sword for Silver

While China’s central bank has introduced a large stimulus package to combat deflationary pressures, it may also redirect investments toward equities and real estate, adding complexity to silver markets.

Geopolitical Tensions Underpin Safe-Haven Demand

Silver has surged over 30% in 2024, supported by ongoing Middle East conflicts and increased central bank demand for safe-haven assets. Tensions in the region have solidified silver’s status as a store of value.

Key Economic Data on Traders’ Radar

Traders are focusing on critical U.S. economic data releases, particularly Fed Chair Jerome Powell’s remarks and Friday's Personal Consumption Expenditures (PCE) data. These events are likely to influence silver prices.

Market Forecast: Bullish Trend with Cautionary Notes

The outlook for silver appears bullish, contingent on upcoming economic data. Traders should monitor the $31.76 resistance level as a potential signal for extended gains, but exercise caution near current resistance levels.