Silver prices are holding strong near $39.00 per ounce, their highest level in over five weeks, as global market sentiment turns increasingly supportive of precious metals. The metal remains well-positioned thanks to growing expectations of a U.S. Federal Reserve (Fed) rate cut in September and surging industrial demand from the renewable energy sector, particularly solar power.
According to the latest data, XAG/USD is trading around $38.80 in early Asian market hours, pausing after a three-day winning streak. Despite the minor pullback, silver remains on track to test higher resistance levels, with fundamentals and technicals pointing toward sustained upside momentum in the coming months.
Fed Policy Expectations Fuel Precious Metals
At the Jackson Hole Symposium, Fed Chair Jerome Powell signaled a cautious stance on inflation while acknowledging that risks to the U.S. labor market are building. His remarks reinforced market confidence that the Fed will deliver its first 25 basis-point interest rate cut in September, even though he refrained from confirming the decision outright.
The CME FedWatch Tool now shows that traders are pricing in an 87% probability of a September cut, up sharply from 75% before Powell’s speech. Markets are also anticipating another cut by the end of the year, which would lower the cost of holding non-yielding assets like silver and gold.
Lower interest rates typically weaken the U.S. Dollar Index (DXY) and Treasury yields, making precious metals more attractive as alternative investments. With the Fed under pressure to balance inflation management and slowing job growth, silver has emerged as a key beneficiary.
Industrial Demand – Solar Boom Supports Silver
Unlike gold, silver’s role as both a precious and industrial metal gives it a unique advantage in periods of economic transition. In 2025, industrial demand—particularly from solar photovoltaic (PV) applications—has surged to record highs.
- China, the world’s largest solar producer, installed over 93 gigawatts of solar capacity in May 2025 alone, representing a 300% year-on-year surge.
- In the first half of 2025, China’s solar cell exports rose more than 70%, with India being a major buyer.
- Silver plays a critical role in solar cells, where it is used in conductive paste. This ongoing demand ensures a strong structural support for silver prices beyond short-term market fluctuations.
The continued growth of green energy and electrification industries worldwide is expected to keep silver consumption elevated, further tightening supply and providing a long-term bullish outlook.
Global Economic Data in Focus
While silver has benefited from Fed policy expectations, traders are also eyeing upcoming U.S. economic data releases:
- Q2 GDP (Gross Domestic Product) – Forecasts suggest growth of around 3.0%. A stronger reading may support the U.S. dollar in the short term, pressuring silver.
- PCE (Personal Consumption Expenditures) Price Index – The Fed’s preferred inflation gauge. Any upside surprise could dampen hopes of aggressive rate cuts, weighing on silver.
- Labor market signals – Jobless claims and employment data remain crucial indicators that could shape Fed policy expectations.
These reports will add volatility to the silver market in the coming days and may determine whether XAG/USD holds above $38.50 or tests higher resistance.
Technical Analysis: Silver Price Outlook
Daily Chart Perspective
Silver has been consolidating near $38.80–$39.00, holding firmly above key support zones. The following levels are worth watching:
- Immediate Support: $38.20 – a break below this may trigger a retest of $37.50.
- Major Support: $37.00 – aligned with the 50-day EMA, a critical level to maintain bullish momentum.
- Immediate Resistance: $39.50 – a breakout could open the door to retesting the July high of $39.53.
- Extended Resistance: $40.00 and $43.00 – psychological and structural targets if bullish momentum accelerates.
The Relative Strength Index (RSI) remains neutral around 52, suggesting silver is consolidating before its next directional move.
4-Hour Chart Perspective
On the shorter-term charts, silver is forming a bullish consolidation pattern:
- Trendline Support: Near $38.20
- Upside Trigger: A decisive break above $39.00 could fuel further gains toward $39.50 and $40.00.
- Downside Risk: A drop below $37.50 may invite profit-taking, but demand is likely to re-emerge near $37.00.
Investor Sentiment and Market Correlation
Silver’s outlook is also influenced by broader market risk appetite. Recent gains in equity markets and optimism about global trade talks have reduced safe-haven flows. However, silver’s industrial demand has offset some of this drag, giving it resilience even when gold weakens.
Interestingly, the gold-to-silver ratio has narrowed slightly, reflecting stronger relative performance by silver. A continued decline in this ratio could indicate that silver is entering a more pronounced bullish phase compared to gold.
Long-Term Outlook: Silver’s Dual Role Strengthens the Case
Silver remains one of the most promising commodities for both traders and long-term investors. Its dual role as a precious and industrial asset ensures that it benefits from both monetary easing cycles and structural demand from clean energy technologies.
- Fed Policy Tailwinds: A September rate cut, combined with further easing in late 2025, should provide sustained support.
- Industrial Demand: The solar sector alone is projected to absorb over 140 million ounces of silver annually by 2030, locking in long-term demand.
- Technical Setup: Silver’s ability to stay above $37.00 keeps the bullish case intact, with targets of $40.00–$43.00 possible in the medium term.
Conclusion – Silver Positioned for Sustained Upside
Silver’s current position near $39.00 per ounce reflects the combined influence of Fed policy expectations and booming industrial demand. While short-term volatility is inevitable, particularly with upcoming GDP and inflation data, the broader outlook remains strongly bullish.
Investors should monitor $37.00 support and $39.50 resistance closely. A breakout above $39.50 would confirm renewed momentum and could drive silver toward the psychological $40.00–$43.00 zone in the weeks ahead.
For long-term investors, silver continues to stand out as one of the most attractive assets in the precious metals space. Its unique combination of monetary and industrial drivers ensures that dips remain buying opportunities, particularly while prices stay above the $37.00 technical floor.
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