Silver Rally Sustains Above $72.70 as Market Bets on Deeper Fed Rate Cuts in 2026

Silver (XAG/USD) continues to climb toward the $72.70 level during early European trading on Wednesday, supported by growing market conviction that the Federal Reserve will implement more aggressive monetary easing than currently signaled. According to the CME FedWatch tool, traders are pricing in a 70.6% probability of at least 50 basis points in rate reductions throughout 2026, exceeding the Fed’s own dot plot guidance which suggests only one cut could occur by year-end 2026.

Why Silver Benefits from Lower Rate Expectations

Non-yielding precious metals like silver have historically responded positively to lower interest rate environments, as declining rates reduce the opportunity cost of holding assets that generate no income. With the Fed’s current projections implying a Federal Funds Rate target of 3.4% by the end of 2026, market participants see significant room for policy accommodation. This expectation has created a tailwind for the white metal despite broader economic resilience.

Economic Data Adds Complexity to Rate Cut Narrative

The United States’ third-quarter GDP growth came in at an impressive 4.3% year-over-year, surpassing economist expectations of 3.3% and the previous quarter’s 3.8% reading. This stronger-than-anticipated economic expansion presents a mixed picture for interest rate forecasts. While robust growth typically supports currency strength and can pressure commodity prices, expectations for Fed accommodation remain anchored by softer inflation readings and policy guidance.

The upcoming Initial Jobless Claims data—scheduled for release at 13:30 GMT on Wednesday—will provide additional color on labor market dynamics. Consensus expects the figure to hold steady at 223,000, suggesting stable employment conditions without dramatic deterioration.

Technical Picture Signals Caution Despite Upside Momentum

On the daily timeframe, XAG/USD trades near $72.19 with the 20-day exponential moving average in a positive slope, affirming the prevailing uptrend. However, the Relative Strength Index (14) has reached 80.95, indicating overbought conditions that could precede a consolidation phase or pullback.

Support levels become critical if momentum moderates. The 20-day EMA around $63.07 represents the first meaningful floor. Holding above this dynamic support would maintain bullish structure, whereas a breakdown below this level could trigger deeper retracement as stretched conditions unwind. Such shifts in precious metal valuations often correlate with broader currency movements—traders monitoring global rate differentials between major economies (similar to tracking euro to inr forecast dynamics) recognize that shifts in relative monetary policy drive both commodity and currency performance.

The current setup presents a scenario where silver remains in an uptrend, but rising overbought readings warrant vigilance for potential consolidation before further advances.