Silver Price Forecast: XAG/USD trades firmly near $49.00 ahead of speeches from Fed officials

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Silver price (XAG/USD) holds onto gains near Thursday’s high around $49.00 during the Asian trading session on Friday. The white metal trades firmly even as traders have trimmed bets supporting another interest rate cut by the Federal Reserve (Fed) this year.

Silver price clings to gains near $49.00 despite receding Fed dovish bets.
Improving US-China trade relations weigh on demand for safe-haven assets.
Investors await speeches from Fed members for fresh cues on the monetary policy outlook.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has eased to 72.8% from 91.1% seen a week ago.

Fed dovish expectations have receded after Chairman Jerome Powell stated in the monetary policy announcement on Wednesday that the December rate cut is “far from a foregone conclusion.”

Easing Fed dovish expectations bode poorly for non-yielding assets, such as Silver.

In Friday’s session, investors will focus on speeches from Federal Open Market Committee (FOMC) members: Atlanta President Raphael Bostic and Cleveland President Beth Hammack during the North American session. Investors would like to know more clarity on Powell’s argument against reducing interest rates in December.

Meanwhile, improving trade relations between the United States (US) and China have also diminished the safe-haven demand for Silver. On Thursday, US President Donald Trump stated that China will export rare earths to Washington openly and freely, and is ready to cooperate on fentanyl issues, and to accelerate agricultural trade.

Silver technical analysis

Silver price trades in a tight range around $49.00. The near-term trend of the precious metal has become uncertain as it struggles to return above the 20-day Exponential Moving Average (EMA), which trades around $48.55.

The 14-day Relative Strength Index (RSI) slides below 60.00, suggesting that the bullish momentum has ended for now.

Looking down, the September 23 high of $44.47 would remain a key support. On the upside, the all-time high of $54.50 might act as key barrier.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.