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Silver Extends Rally Above $51 as Markets Bet on Fed December Rate Cut
Traders' Opinions
Summary:
Silver prices advanced beyond $51.70 on Wednesday, extending their recent rally as growing expectations of a December Federal Reserve rate cut bolstered investor appetite for non-yielding assets.
Buy
CLOSEDXAGUSD
End Time
51.700
Entry Price
54.500
TP
50.000
SL
50.730 -1.541 -2.95%
26
Points
Profit
50.000
SL
51.726
CLOSING
51.700
Entry Price
54.500
TP
Silver (XAG/USD) traded around $51.70 on Wednesday, up about 1% on the day, as the metal extended its winning streak on renewed optimism that the Federal Reserve could cut interest rates again in December. Investors’ conviction that the U.S. central bank’s tightening cycle is nearing its end has strengthened markedly this week, with the CME FedWatch Tool showing nearly a 68% probability of a 25-basis-point rate reduction next month, compared with around 62% a day earlier. The market’s shift reflects growing concerns that the U.S. economy is losing momentum faster than expected, compelling policymakers to pivot toward supporting growth.
Recent economic indicators have reinforced this view. The University of Michigan’s Consumer Sentiment Index fell to its lowest level since 2022, signaling that American households are turning more pessimistic about the outlook. Meanwhile, October data showed a slowdown in job creation and a dip in retail spending, both of which point to cooling economic activity. With inflation showing signs of easing, many investors believe the Fed’s next move will likely focus on stabilizing the economy rather than continuing to prioritize price control. This change in sentiment has proven favorable for silver, which tends to benefit when yields fall and the dollar weakens.
The resolution of the partial U.S. government shutdown has also helped improve market sentiment. Earlier this week, the U.S. Senate passed a funding bill, and the House of Representatives is expected to finalize it soon, paving the way for federal agencies to reopen. The move has offered temporary reassurance to investors who feared prolonged fiscal disruption, though analysts caution that the delay in data publication will make it more difficult for the Fed to accurately gauge near-term economic conditions. The reopening of government departments will eventually allow for the resumption of key economic reports, but for now, the absence of fresh data leaves traders relying heavily on Fed communications and market expectations.
The U.S. dollar remains under pressure, with the Dollar Index hovering around 99.60 as investors await a series of speeches from Federal Open Market Committee (FOMC) officials. Analysts at OCBC have suggested that the scarcity of new data will keep markets attentive to what Fed officials say, while economists at ING warned that once data releases resume, they could show deeper weakness in employment and output. Such a scenario would likely weigh further on the greenback. A softer dollar typically boosts demand for dollar-denominated commodities like silver, as it makes them more affordable for holders of other currencies. This dynamic has been a significant driver behind silver’s continued strength in recent sessions.
Technical Analysis
The technical picture for silver is equally supportive. The metal recently broke through a critical resistance level at $51.25, marking a clear bullish breakout from a consolidation range that had capped prices for weeks. The move was reinforced by the price holding above the 50-day Exponential Moving Average (EMA50), suggesting that momentum remains firmly on the side of the bulls. The metal has also been trading along a short-term ascending trendline, with momentum indicators showing positive readings even as the relative strength index (RSI) edges toward overbought territory.
Before the breakout, silver had been consolidating between $45.43 on the downside and $50.00 on the upside. The surge above $51.00 has transformed that area into a newly established support zone. The price action suggests that a retest of the breakout region could occur before the next upward leg, potentially offering buyers a new entry opportunity. If silver manages to hold above the $51.00 level, the next major resistance lies near $54.50, representing a possible 7% upside from current levels. The recent bullish momentum, confirmed by multiple rejections of lower levels in previous sessions, highlights the underlying strength of this move.
TRADE RECOMMENDATION
BUY SILVER
ENTRY PRICE: 51.70
STOP LOSS: 50.00
TAKE PROFIT: 54.50
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