White Metal Surge: XAG/USD Approaches $72.70 on Persistent Fed Rate-Cut Bets with Long-Term Silver Projections in Focus

The XAG/USD market continues to gather momentum as it approaches the $72.70 level during early European trading on Wednesday. This advance reflects a confluence of supportive factors centered on expectations for significant Federal Reserve monetary easing in 2026.

Technical Setup Supports Further Upside

On the daily timeframe, silver trades near $72.19, maintaining its position comfortably above the 20-day exponential moving average. The upward trajectory of this dynamic support level reinforces the broader bullish bias. However, the Relative Strength Index (RSI) has climbed to 80.95, indicating overbought conditions that warrant caution regarding potential consolidation phases. Should the rally lose steam, the 20-day EMA around $63.07 would serve as the initial support zone. Breaking below this level could trigger deeper retracement pressure as the market processes stretched readings.

Fed Policy Backdrop Remains Dovish

Market participants have priced in aggressive monetary accommodation heading into 2026. According to CME FedWatch probability data, there is a 70.6% chance that the Federal Reserve will implement at least 50 basis points of rate reductions next year. This dovish positioning diverges notably from the Fed’s own dot plot projection, which suggested only marginal easing beyond the terminal rate of 3.4% by end-2026. Since precious metals like silver benefit from lower rates due to their non-yielding nature, this gap between market expectations and Fed guidance provides tailwind for the white metal.

Economic Data Offers Mixed Signals

The US economic backdrop delivered an upside surprise this week. Third-quarter GDP expanded at an annualized rate of 4.3%, surpassing both economist estimates of 3.3% and the prior quarter’s 3.8% growth rate. This robust reading highlights underlying economic resilience, yet has not derailed the market’s conviction in an accommodative Fed path. Investors will monitor Initial Jobless Claims data scheduled for 13:30 GMT Wednesday, where consensus forecasts a steady reading at 223K.

Silver’s Long-Term Trajectory

Looking beyond immediate price action, silver projections for the next 10 years remain compelling for investors considering the white metal’s dual role as both industrial commodity and store of value. Structural tailwinds—including green energy transition demand, potential inflation concerns, and central bank monetary experimentation—suggest the case for silver holdings retains merit as part of broader portfolio diversification strategies during periods of policy uncertainty and economic transition.

The near-term technical picture and intermediate macro backdrop align constructively for XAG/USD, though overbought momentum readings suggest traders should remain vigilant for consolidation pullbacks within the uptrend.