Silver Price Forecast: XAG/USD declines to near $31.50 ahead of Fed Powell’s speech

• Silver price slumps to near $31.50 despite a steep fall in the US Dollar.
• Investors await Fed Powell’s speech for fresh interest rate guidance.
• Market participants will pay close attention to a string of US labor market data.

Silver price (XAG/USD) falls sharply to near $31.50 in Monday’s European session. The white metal weakens even though the US Dollar (USD) has dropped to near its yearly lows ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech, which is scheduled at 17:00 GMT.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, appears as vulnerable near 100.20. 10-year US Treasury yields climb to near 3.77%. Higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Investors will pay close attention to Fed Powell’s speech as he is expected to provide fresh interest rate guidance. Market participants want to know whether the Fed will reduce interest rates again by a larger-than-usual cut of 50 basis points (bps) in the November meeting.

According to the CME FedWatch tool, traders are almost equally split for a 25 or 50 bps interest rate cut in November. The tool also shows that the Fed will reduce interest rates collectively by 75 bps in the remainder of the year.

This week, investors will focus on a slew of the United States (US) economic data, such as JOLTS Job Openings for August and the ADP Employment Change and Nonfarm Payrolls (NFP) data for September.

Silver technical analysis:

Silver price struggles to extend its upside above the horizontal resistance plotted from the May 21 high of $32.50 on a daily timeframe. The near-term outlook of the white metal remains firm as the 20-day Exponential Moving Average (EMA) at $30.55 is sloping higher.

The 14-day Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, suggesting that a bullish momentum is intact.

Silver daily chart