Will Silver's Bull Run Sustain? XAG/USD Climbs to $72.70 as Rate-Cut Bets Fuel Momentum

Silver (XAG/USD) has surged higher toward the $72.70 level during early European trading Wednesday, continuing its impressive advance on the back of persistent market expectations for significant Federal Reserve policy easing. The question on traders’ minds: is the bull run over, or does more upside remain?

Market Sentiment Driving the Rally

The white metal’s strength is primarily anchored to rate-cut expectations for 2026. According to CME FedWatch data, market participants are pricing in a 70.6% probability of at least 50 basis points in cuts from the Fed next year—a substantially more dovish scenario than the central bank’s own December projections. The Fed’s dot plot indicated policymakers expect the Federal Funds Rate to settle around 3.4% by end-2026, suggesting minimal further cuts beyond what’s already priced in.

This disconnect matters significantly for Silver. Lower interest rates typically boost demand for non-yielding precious metals, as investors seek alternative stores of value. The current positioning reflects genuine conviction among traders that the Fed will prove more accommodative than officials publicly suggested.

Macro Backdrop Adding Complexity

An unexpected economic surprise emerged this week when US Q3 GDP came in at 4.3% year-on-year—beating economist consensus of 3.3% and the prior quarter’s 3.8%. The stronger-than-expected growth reading creates an interesting tension in the market: robust economic data typically supports higher rates, yet rate-cut bets remain resilient. This dynamic suggests investors are less focused on near-term strength and more concerned about potential economic headwinds ahead.

Traders will next turn attention to Initial Jobless Claims data, due at 13:30 GMT Wednesday, where first-time claimants are expected to hold steady at 223K. Labor market signals could influence sentiment around Fed rate-cut timing.

Technical Picture: Room Left to Run?

On the daily chart, XAG/USD trades near $72.19, with the 20-day exponential moving average sloping upward and price holding comfortably above it—a constructive technical setup. However, the RSI (14) has climbed to 80.95, deep into overbought territory. This stretched momentum reading could indicate a pullback or consolidation phase is due.

Should selling pressure emerge, the 20-day EMA around $63.07 would serve as the first significant support level. The broader uptrend remains intact as long as Silver holds above this dynamic floor. A break below would likely trigger deeper profit-taking and expose lower support levels as overbought conditions gradually unwind.

The technical setup thus presents a classic bull-market pullback scenario: strong fundamentals supporting higher prices, but extreme momentum readings suggesting near-term caution may be warranted.