Silver Rallies Toward $72.70 as Rate-Cut Bets Intensify Ahead of 2026

Silver (XAG/USD) continues its impressive advance toward the $72.70 level as traders increasingly price in aggressive interest rate cuts from the Federal Reserve during 2026. The momentum remains robust despite mixed signals from broader economic data, with market participants positioning for a dovish pivot by policymakers.

Market Drivers Behind the Rally

The CME FedWatch tool reveals that traders are assigning a 70.6% probability to at least 50 basis points of cuts by the Fed in 2026—a notably more aggressive outlook than the central bank’s own projections. The Fed’s latest dot plot suggested a more cautious approach, with officials collectively anticipating the Federal Funds Rate settling around 3.4% by year-end 2026. This divergence between market expectations and official guidance has fueled speculation about further monetary easing.

From a macro perspective, lower interest rates traditionally support non-yielding precious metals like silver. Weaker real returns on cash holdings redirect capital toward tangible assets, creating structural tailwinds for the white metal.

Meanwhile, US economic data painted a surprisingly strong picture. Third-quarter GDP expanded at an annualized pace of 4.3%, outpacing both prior expectations of 3.3% and the second-quarter reading of 3.8%. This resilience in growth adds complexity to the rate-cut narrative—supporting silver on dovish bets while potentially limiting the extent of policy easing.

Technical Picture Suggests Caution

On the daily timeframe, XAG/USD trades near $72.19, with the 20-day exponential moving average providing underlying support. The average’s upward trajectory reinforces the bullish structure, though momentum indicators flash warning signs. The RSI (14) stands at an elevated 80.95, signaling overbought conditions that could warrant consolidation or pullbacks in the near term.

Should momentum soften, initial support materializes around the 20-day EMA at approximately $63.07. Maintaining above this dynamic floor preserves the broader uptrend, whereas a breakdown below it would suggest deeper retracement as stretched conditions unwind.

What’s Next

Investors will monitor Wednesday’s Initial Jobless Claims release (13:30 GMT) for signals on labor market momentum. Current expectations call for steady claims at 223K, which could reinforce expectations for continued rate-cut potential in the policy cycle ahead.