Silver (XAG): Triple Top Breakout at $29 Spurs Bullish Momentum
LONDON (August 20) Silver prices (XAG/USD) continue to decline, currently trading near $29.09 after hitting an intraday low of $29.20. This drop is largely due to a mild recovery in the US dollar and a shift to risk-on sentiment in the markets.
Despite growing speculation about a possible Federal Reserve rate cut in September, the strengthening US dollar has weighed on silver prices.
Additionally, reduced fears of a severe US economic slowdown have boosted market confidence, diminishing silver’s appeal as a safe-haven asset. However, the decline could be temporary, as ongoing geopolitical issues may renew interest in the metal.
Traders remain cautious, awaiting the release of the July FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday.
In the meantime, dovish Federal Reserve expectations and persistent geopolitical risks may provide some support for silver (XAG/USD), potentially limiting further declines.
Silver Prices Decline Amid Strong Dollar and Fed Rate Uncertainty
Despite rising hopes for a Federal Reserve rate cut in September, the US dollar continues to strengthen. Investors await clearer signals on the Fed’s next move before making new decisions.
The release of the July FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell’s speech on Friday are highly anticipated for potential clues on a rate cut.
Although strong July retail sales eased recession fears, the CME Group’s FedWatch Tool still suggests the Fed may start cutting rates in September, possibly reducing by over 200 basis points by the end of 2025.
Minneapolis Fed President Neel Kashkari sees rate cuts as a reasonable topic for September, while Chicago Fed President Austan Goolsbee advises against keeping high rates for too long. Meanwhile, San Francisco Fed President Mary Daly supports a gradual approach to lowering rates.
As a result, the strong US dollar and reduced expectations for aggressive rate cuts are pressuring silver prices, keeping them subdued amid uncertainty.
Short-Term Forecast
Silver (XAG/USD) remains under pressure, trading around $29.40. A mild US dollar recovery and improved market sentiment have limited silver’s upside.
FXStreet
