Silver Price Forecast: XAG/USD holds onto gains near $32 on mounting Fed large rate cut bets

• Silver price clings to gains near $32.00 as Fed large rate cut bets swell.
• The next move in the US Dollar will be guided by the US core PCE inflation data.
• Silver price aims to recapture the decade-high of $32.50.

Silver price (XAG/USD) grips gains near the key resistance of $32.00 in Wednesday’s New York session. The white metal holds strength as the US Dollar remains under pressure amid growing speculation that the Federal Reserve (Fed) will deliver another sizable interest rate cut in any of the remaining two policy meetings this year.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, hovers near the yearly low of 100.20. Meanwhile, 10-year US Treasury yields jump to near 3.77%. Historically, higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver. But, in this case, the Silver price remains firm.

According to the CME FedWatch tool, the central bank is expected to reduce its key borrowing rates further by 75 bps in the remainder of the year, suggesting that there will be one 50 bps and one 25 bps rate cut. 30-day Federal fund futures pricing data shows that the probability of the Fed reducing interest rates by a larger-than-usual margin in November has increased to 59% from 37% a week ago.

Going forward, investors will focus on the United States (US) core Personal Consumption Expenditure price index (PCE) data for August, a Fed’s preferred inflation gauge, which will be published on Friday. Economists estimate the annual inflation measure to have accelerated to 2.7% from 2.6% in July.

Silver technical analysis

Silver price approaches the decade high of $32.50. The white metal strengthened after the breakout of the downward-sloping trendline from May 21 high of $32.50. Upward-sloping 20-day Exponential Moving Average (EMA) near $30.20 suggests that the near-term outlook of the Silver price is bullish.

The 14-day Relative Strength Index (RSI) strives to sustain in the 60.00-80.00. A bullish momentum would trigger if the oscillator manages to do so.

Silver daily chart