Silver (XAG) Forecast: Short-Term Resistance in Focus as Long-Term Silver Market Firms Up
LONDON (September 18) Silver stabilized Thursday after a sharp pullback earlier in the week, with spot prices attempting to rebound from the $41.14 low. Traders are watching the $41.68 pivot closely as the market consolidates recent losses following the Federal Reserve’s 25-basis-point rate cut.
The setup remains bullish—provided key support levels continue to hold and broader macro factors align in silver’s favor.
Fed Eases, But Keeps Markets Guessing on Future Cuts
The Federal Reserve delivered a widely expected rate cut, lowering its benchmark rate to 4.00%–4.25%. While that move confirmed the start of an easing cycle, Chair Jerome Powell avoided any forward guidance, stating that policy decisions will be made “meeting by meeting.”
Despite the cautious tone, the market is betting on more action ahead. CME’s FedWatch tool now shows a 90% probability of another 25-basis-point cut in October. Easing policy is generally supportive for non-yielding assets like silver, particularly early in the cycle when real rates start to slip.
Dollar Weakness and Falling Yields Boost Silver’s Appeal
Daily US Dollar Index (DXY)
After initially rising on Powell’s comments, the U.S. dollar reversed course, with the dollar index pulling back toward 97.06—just above Wednesday’s low of 96.224, the weakest since February 2022.
Meanwhile, U.S. Treasury yields softened. The 10-year fell to 4.055% and the 2-year dropped to 3.528%, reinforcing the bullish case for silver as lower yields reduce the opportunity cost of holding it.
Though these same conditions helped gold rebound from session lows, silver continues to offer a stronger near-term technical setup, especially as industrial demand and concerns around supply tightness remain underlying drivers.
Silver Bulls Face a Pivotal Choice at $41.68
Daily Silver (XAG/USD)
The current pause near $41.68 is a classic inflection point. Traders have two options: buy strength on a confirmed breakout above $42.97, or wait for a pullback into the defined value zone between $39.96 and $39.59.
The 50-day moving average at $39.11 is critical—so long as silver remains above that level, the trend bias favors the upside. “Buy-the-dip” strategies are likely to remain active unless that support is decisively broken.
Outlook: Bullish Bias Intact Above 50-Day as Market Eyes $42.97
With dovish Fed policy in play and dollar/yield pressures easing, silver looks supported for another test of $42.97. A clean break above opens the path for extension, while failure to hold $39.96–$39.11 puts short-term momentum at risk.
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