Silver Price Analysis: XAG/USD aims to recapture 11-month high slightly above $26

• Silver price advances toward 11-month high at $26.14 as the US Dollar weakens.
• Fed’s projections for three rate cuts this year remain unabated.
• The market sentiment turns bullish on higher expectations for the Fed reducing interest rates from June.

Silver price (XAG/USD) extends its upside to $25.70 in Thursday’s European session. The white metal is an inch away from reclaiming an 11-month high at $26.14. The appeal for precious metals has strengthened after the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.

For the fifth time in a row, the Fed kept key borrowing rates unchanged in the range of 5.25%-5.50%, as expected. The appeal of the US Dollar weakened after the Fed stuck with three rate cut projections for this year. This led to a significant increase in market expectations for the Fed to lower interest rates from the June meeting.

According to the CME FedWatch tool, the chances for a rate cut have increased to almost 75% from 59%, which was recorded before the Fed’s policy announcement. Expectations for Fed rate cuts in June rose significantly despite the Fed's failure to provide any meaningful timeframe for rate cuts, as it lacks evidence that inflation will sustainably decline to the 2% target.

Meanwhile, the demand for risk-sensitive assets improves as investors seem confident that rate cuts will start in June. S&P 500 futures have posted significant gains in the London session. 10-year US Treasury yields have dropped slightly to 4.26%. The US Dollar Index (DXY) recovers intraday losses but broadly seems weak.

Silver technical analysis

Silver price approaches the 11-month high at $26.14. The near-term demand is bullish as the 20-day Exponential Moving Average (EMA) at $24.35 is sloping higher. The 14-period Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, indicating that momentum leans towards the upside. Bullish momentum remains unabated as the momentum oscillator is still far from turning overbought.

If the Silver price breaks above its 11-month high at $26.14, it will discover more upside. This would open upside towards the 8 March 2022 high at $26.95, followed by the 15 September 2020 high at $27.83.

In an alternate scenario, a breakdown below December 22 high at $24.61 would expose the asset to 12 March low at $24.00 and January 30 high at $23.30.

Silver daily chart