• Silver price faces some selling pressure around $44.80 in Friday’s Asian session.
• A firmer US Dollar undermines the USD-denominated commodity price. 
• Rising geopolitical risks might cap the downside for the Silver price. 

Silver price (XAG/USD) attracts some sellers to near $44.80 after reaching its highest in over 14 years during the Asian trading hours on Friday. Traders await the release of the US August Personal Consumption Expenditures (PCE) Price Index data later on Friday for fresh impetus. 

The precious metal has gained momentum in the previous sessions as markets expected at least two rate cuts from the Federal Reserve (Fed) in the remaining two Fed meetings this year. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal. 

Nonetheless, the cautious tone from Fed officials lifts the US Dollar (USD) and weighs on the USD-denominated commodity price. Fed Chair Jerome Powell said on Tuesday that the policymakers continue to deal with the double whammy of potentially higher inflation and a slowing labor market. Powell added that the interest rates are in a good place to deal with either threat, suggesting he sees no urgency to lower rates aggressively.  

Meanwhile, Fed Governor Stephen Miran preferred a more aggressive 0.50% cut, arguing that with temporary tariff effects aside, inflation was closer to the 2% target. Traders slightly pared back bets for a Fed rate cut by year-end to about 33%, according to LSEG data.  

Ongoing geopolitical tensions in Europe and the Middle East might boost the safe-haven flows, helping limit Silver’s losses in the near term. On Thursday, Ukraine’s President Zelensky warned that Russian President Vladimir Putin “will keep driving the war forward wider and deeper” if he is not stopped. Russian aerial attacks have become larger and more frequent since Moscow scaled up its drone production at the start of the year.  But while most of these assaults used to come at night, there have been more daytime threats in recent weeks.

• Gold Price drifts higher to around $3,750 in Friday’s early Asian session.
• Traders continue to assess mixed signals from Fed officials. 
• The US PCE inflation data for August will be in the spotlight later on Friday. 

Gold Price (XAU/USD) edges higher to near $3,750 during the early Asian session on Friday. The precious metal gains ground amid expectations of further US rate cuts from the Federal Reserve (Fed) this year and rising geopolitical risks. The release of the US Personal Consumption Expenditures (PCE) Price Index data for August will take center stage later on Friday. 

The US central bank decided to cut its benchmark interest rate by 25 basis points (bps) at its September meeting, bringing the Federal Funds Rate to a target range of 4.00% to 4.25%. Traders are expecting at least two rate reductions in this year’s remaining two Fed meetings. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. 

However, comments from Fed policymakers, including Chair Jerome Powell, indicated a lot will depend on upcoming economic data. Meanwhile, Fed Governor Stephen Miran preferred a more aggressive 0.50% cut, arguing that with temporary tariff effects aside, inflation was closer to the 2% target. The cautious tone of Fed officials might cap the upside for the yellow metal in the near term. 

Traders will closely watch the US PCE inflation data later on Friday for fresh impetus. The Fed’s preferred measure of underlying inflation likely grew at a slower pace last month. “Softer inflation could strengthen the case for Fed rate cuts, supporting bullion, with markets pricing two cuts this year,” Kaynat Chainwala, analyst at Kotak Securities Ltd., said in a Thursday note.

• Silver bounced and resumed its uptrend on Thursday to hit fresh long-term highs at $45.00.
• Safe-haven demand amid ongoing geopolitical concerns is supporting precious metals.
• XAG/USD is at overbought levels after rallying nearly 17% over the last three weeks.

Silver’s (XAG/USD) has resumed its bullish trend on Thursday, reaching fresh multi-year highs at $44,90 so far. The precious metal has drawn some support from a stalled US Dollar’s recovery, with investors cautious ahead of the final reading of the Q2 US GDP and a slew of speeches from Fed policymakers due later in the day.

Precious metals are trading higher as ongoing geopolitical tensions in Europe and the Middle East keep weighing on risk appetite. Denmark has been forced to close some of its main airports today amid reported “coordinated drone attacks,” with Russia emerging as the main suspect.

Technical Analysis: Silver is back to overbought levels

With today’s rally, the XAG/USD pair reaches levels nearly 17% above late August lows, and such steep rallies tend to come to an end. The Relative Strength Index has reached oversold levels at most time frames, which hints at a potential correction.

On the upside, a trendline resistance right above $45,00 level might challenge bulls. Above here, the 261% Fibonacci retracement of the 16-17 September pullback, at $46.10, emerges as the next potential target.

To the downside, immediate support is at the previous highs of $44.50 (September 23 high), ahead of the September 23 and 24 lows, at $43.65, and the September 16 high, at the $43.00 area.

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

XAU/USD Current price: $3,733.93

• Upbeat United States data boosted the US Dollar, while undermining demand for high-yielding assets.
• The US will publish August Personal Consumption Expenditures Price Index data on Friday.
• XAU/USD confined to a tight range with a modest downward tilt.

Gold price consolidates in a tight range around the $3,730 level in the American session on Thursday, as the market attention falls elsewhere. Investors are pricing in the latest round of upbeat United States (US) data, which fueled demand for the US Dollar (USD) while hitting Wall Street.

The Greenback soared after the US reported that the final estimate of the Q2 Gross Domestic Product (GDP), as annualized growth was upwardly revised to 3.8% from the previous estimate of 3.3%. Furthermore, Durable Goods Orders were up 2.9% in August, much better than the previous -2.6% slide of the anticipated -0.5%. Finally, Initial Jobless Claims for the week ended September 27 were up by 218K, better than the expected 235K and down from the 232K posted in the previous week.

The news, while boosting demand for the USD, took its toll on stocks’ markets as it cooled further down expectations for aggressive Federal Reserve (Fed) interest rate cuts. The poor performance of Wall Street helps to keep XAU/USD afloat amid resurgent safe-haven demand.

On Friday, the US will release an update on inflation. The country will unveil August Personal Consumption Expenditures (PCE) Price Index data, with the core annualized reading foreseen at 2.9%, matching the July figure. Other than that, the country will publish the final estimate of the Michigan Consumer Sentiment Index for September.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it hovers around its daily opening, confined to a tight intraday range. The odds for a steeper decline seem unlikely, as the pair is holding well-above all its moving averages, with a firmly bullish 20 Simple Moving Average (SMA) currently at around $3,633. At the same time, the Momentum indicator keeps easing, although withing positive levels, reflecting the absence of fresh buying interest rather than hinting at another leg south.

In the near term, and according to the 4-hour chart, the XAU/USD is at risk of shedding some extra ground. The pair develops below a flat 20 SMA, while still above bullish 100 and 200 SMAs. At the same time, the Momentum indicator aims firmly lower within negative levels, while the Relative Strength Index (RSI) indicator aims lower, yet around its 50 level.

Support levels: 3,722.54 3,707.40 3,691.90

Resistance levels: 3,758.80 3,779.15 3,791.00