The rebound is reigniting, approaching the $52 level... Fed easing signals are the catalyst

Silver Prices Surge Amid Fed Rate Cut Expectations, Highlighting Attraction of Zero-Yield Assets

On Wednesday, in the Asian market, the spot silver(XAG/USD) price rose for the third consecutive trading day, approaching $52 per ounce. The main driver of this increase is the rising likelihood of additional rate cuts by the Federal Reserve(Fed), which has led to a decline in Treasury yields.

Currently, the US 10-year Treasury yield hovers around 4.00%, but on a weekly basis, it has weakened by approximately 3.4%. Generally, when Treasury yields fall, the opportunity cost of holding silver, a tangible asset that does not generate interest income, decreases, making it more attractive for investors. Additionally, the 20-year Treasury yield is moving in the same direction, signaling easing across the long-term asset spectrum.

Probability of December Rate Cut Nears 85%, Market Sentiment Turns More Bearish

According to CME FedWatch data, the market now prices in an 85.3% chance that the Fed will cut the policy rate by 25 basis points at the December policy meeting. This is a significant increase from 50.1% a week ago, indicating that expectations for further easing are gaining momentum among investors.

New York Fed President John Williams stated last week, “Current monetary policy remains restrictive, but recent measures have eased the tightening,” and “there is room for further policy adjustments in the short term.” This dovish tone has clearly signaled to the market the possibility of additional rate cuts, fueling buying interest in zero-yield assets like silver.

Political Variables May Accelerate the Easing Cycle

Political uncertainty is also contributing to the market’s expectations of an earlier easing cycle. According to Bloomberg, Kevin Hasset, a former White House economic advisor, is being considered as a potential successor to Jerome Powell as Fed Chair. If a close associate of former President Trump takes a top Fed position, there is speculation that this could pressure for an early end to high-interest-rate policies, potentially accelerating the rate cut cycle in the medium to long term.

Technical Analysis: Steady Rise Above 20-Day EMA, $54.50 as Key Resistance

On the daily chart, XAG/USD is currently trading around $51.94, remaining above the upward-sloping 20-day exponential moving average (EMA). This indicates a healthy short-term bullish trend.

The Relative Strength Index (RSI) stands at 59.15, not yet entering overbought territory (above 70), but above the neutral level of 50, suggesting room for further upward momentum.

Support and Resistance Levels:

• Primary Support: Around $50.40, formed by the 20-day EMA. If this level holds, a “correction followed by a rebound” scenario is likely.
• Secondary Support: The previous high of $44.47 on September 23, serving as a medium-term key support.
• Major Resistance: The all-time high of $54.50, representing a strong upward barrier.

As long as prices close above the 20-day moving average, the short-term trend remains bullish. However, if RSI declines toward the 50 level, upward momentum may weaken, and the price could enter a consolidation phase, requiring careful monitoring.

Can $54.50 Breakout Happen? Focus on Policy and Technical Confluence

The future direction of silver prices will likely depend on two factors: first, whether the Fed actually implements rate cuts and the pace of such cuts; second, whether there is sufficient buying volume to break through the technical resistance at $54.50. Given the current macroeconomic environment and market sentiment, silver continues to strengthen its position as a hedge against real assets, and breaking above $52 could be the first step toward re-entering the $54.50 zone.