Silver (XAG/USD) continues to trade with a bullish undertone, holding near the $38.00 zone after a decisive weekly breakout above $37.87. The market’s momentum remains supported by expectations of a U.S. Federal Reserve interest rate cut in September, dovish remarks from Fed Chair Jerome Powell at Jackson Hole, and rising industrial demand. Traders, however, are keeping a close eye on the upcoming Core PCE Inflation Index and comments from Federal Reserve officials, which may set the tone for silver prices in September.
Fed Signals and Market Sentiment
Last week, silver closed at $38.87 per ounce, gaining more than 2% as investors priced in a higher probability of rate cuts. According to the CME FedWatch Tool, futures now reflect an 91% chance of a 25-basis-point cut at the September Fed meeting.
Powell’s speech at Jackson Hole shifted the narrative, signaling that the central bank is prepared to act if labor market conditions continue to weaken. While he avoided committing to an exact timeline, his dovish tone pushed real yields lower and gave silver fresh upside momentum.
The Fed now appears more tolerant of allowing inflation to run above target temporarily, a stance that supports safe-haven metals. At the same time, persistent tariff effects and sticky wage costs mean that inflation risks remain, making silver an attractive hedge.
Inflation Data and Waller’s Speech in Focus
This week, markets are gearing up for critical U.S. economic releases:
- Core PCE Inflation Index (Friday) – The Fed’s preferred inflation gauge, forecast at 0.3% for July, will be a key test. A softer reading could reinforce dovish bets, while hotter numbers may trigger volatility in precious metals.
- Weekly Jobless Claims (Thursday) – After a mixed performance in labor market data, traders will closely assess whether employment softness deepens.
- Fed Governor Christopher Waller’s Speech (Thursday) – As a key FOMC voice, Waller’s remarks could influence expectations. A hawkish tone may weigh on silver, while dovish comments would strengthen the bullish case.
Silver Technical Outlook
Weekly Chart – Bullish Breakout
- Silver confirmed a weekly breakout above $37.87, a level that now acts as strong support.
- Next downside supports are located at $36.96, $36.21, and the stronger base at $35.28.
- On the upside, the key target remains the multi-year high of $39.53. A close above this resistance would likely open the door to $44.22, a long-term technical objective with little intermediate resistance.
Daily Chart – Momentum Still Favoring Bulls
- The RSI remains steady above the midline, signaling sustained buying interest.
- Immediate resistance sits at $38.90–$39.50, while key support holds near $37.80.
- If silver maintains momentum above $38.00, a test of $40.00 in the short term becomes likely.
Industrial Demand Adds Another Layer of Support
Beyond monetary policy, industrial demand is strengthening silver’s outlook. With China leading global renewable energy expansion, silver demand for solar cells has grown rapidly. In the first half of 2025, Chinese solar cell exports surged more than 70%, largely driven by demand from India and other manufacturing-heavy economies.
As silver is a key component in photovoltaic technology, record solar installations worldwide are expected to keep industrial consumption elevated, providing a fundamental tailwind to prices.
Forecast: Silver’s Bullish Bias Intact
As long as XAG/USD holds above $37.87, the market bias remains firmly bullish. Short-term volatility may arise from upcoming PCE data and Fed commentary, but the broader structure continues to point upward.
- Bullish Scenario: A decisive breakout above $39.53 would confirm fresh bullish momentum, with scope to test $42–$44 in the coming months.
- Bearish Scenario: A failure to hold $37.87 could neutralize momentum and expose supports at $36.20–$35.30, though long-term investors are likely to view dips as buying opportunities.
Bottom Line
Silver is consolidating its bullish breakout while awaiting fresh direction from U.S. economic data and Powell’s Jackson Hole aftermath. With a supportive technical structure, firm industrial demand, and high expectations for Fed easing, silver remains positioned for further gains. For traders and investors watching the precious metals market, $39.53 is the level to watch—a breakout above this zone could unleash the next major rally.
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