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Silver hits its highest level since September 2011. Markets see an 87% likelihood of a Federal Reserve rate cut in September, despite elevated core PCE inflation. Technical analysis suggests a potential move above $40.00, with resistance at $41.48 and $43.40, and support at $39.00 and the 100-period EMA.
Silver (XAG/USD) continues its upward trajectory for the fourth straight day, reaching a 14-year peak on Friday. Spot prices hover around $39.85, surpassing the July 23 high of $39.53, driven by a weakening US Dollar and robust safe-haven demand.
The rally is fueled by expectations of a Federal Reserve interest rate cut in September, despite mixed US inflation figures. July’s core PCE inflation climbed to 2.9% year-over-year, a five-month high, while headline PCE remained at 2.6%. However, markets are prioritizing labor market signals, with cooling hiring and softer wage growth overshadowing inflation concerns, supporting an 87% probability of a rate cut. A weaker US Dollar, geopolitical tensions, and strong industrial demand from solar and green energy sectors further bolster silver’s bullish momentum.
Adding to the backdrop, uncertainty over the Federal Reserve’s independence has intensified after President Donald Trump’s attempt to remove Fed Governor Lisa Cook over alleged mortgage fraud. Cook’s lawsuit to block the decision has sparked concerns about the central bank’s autonomy, weakening confidence in US monetary policy and further pressuring the US Dollar, which has boosted safe-haven flows into silver.
Technically, silver’s break above $39.50 has solidified its bullish outlook, with the $40.00 level now in sight. On the 4-hour chart, XAG/USD trades well above the 100-period EMA at $38.35, while the RSI, nearing 74, indicates strong but overbought conditions. A sustained move above $40.00 could target the September 12, 2011, high of $41.48, followed by the September 5, 2011, peak at $43.40. Support is seen at $39.00, with the 100-period EMA at $38.35 acting as a key level for bullish momentum.
