Is Silver's Rally Hitting a Wall? Why XAG/USD Could Keep Pushing Beyond $72.70

White Metal Rides Fed Dovish Wave

Silver (XAG/USD) just hit $72.70 in early European trading, and the question on everyone’s mind is simple: can this bull run actually sustain? To understand whether the momentum can hold, you need to look at what’s really driving it—and spoiler alert, it’s not just technical chart patterns.

The biggest tailwind right now is how traders are reading the Fed’s next moves. According to CME FedWatch data, there’s a 70.6% probability that the Fed will slash rates by at least 50 basis points throughout 2026. That’s notably more aggressive than what Fed officials themselves suggested in their latest dot plot projections. The central bank’s own guidance indicates the Fed Funds Rate settling around 3.4% by end-of-2026, which implies a relatively modest 25-50 bps cut scenario. But the market isn’t buying that cautious narrative—traders are betting the Fed will be forced to cut deeper as economic pressures mount.

Why does this matter for Silver? Simple: lower rates make non-yielding assets like the white metal more attractive. When bonds and savings accounts pay less interest, investors rotate into hard assets. It’s a mechanical advantage that has historically supported Silver during accommodative Fed cycles.

The Economic Backdrop Gets Complicated

Then came Wednesday’s GDP surprise. The US economy grew 4.3% year-on-year in Q3, smashing expectations of just 3.3% and significantly outpacing the prior quarter’s 3.8% reading. On paper, that’s a red flag—stronger growth usually means less urgency for rate cuts. But here’s the plot twist: markets are interpreting this as temporary momentum that won’t derail the Fed’s eventual pivot. The consensus remains that the Fed will prioritize labor market softness over headline growth strength.

Later in Wednesday’s session, the Initial Jobless Claims figure (due at 13:30 GMT) will offer more clues. The forecast sits at 223K, unchanged from prior levels. Any spike in jobless claims could reinforce the dovish narrative and keep the Silver rally intact.

Technical Picture Shows Cracks, But Trend Remains Bullish

At $72.19, XAG/USD is trading with the 20-day exponential moving average (EMA) firmly supporting from below. The EMA’s upward slope continues to validate the bull thesis—price stays well above this dynamic floor, which is the textbook signal for ongoing strength.

But here’s where it gets interesting: the RSI (14) is reading 80.95, deep in overbought territory. That’s not necessarily a sell signal, but it does flag that momentum has gotten stretched. Asset managers and algorithmic traders often use extreme RSI readings as a cue to trim positions or wait for consolidation. If the rally does pause, the first support layer sits around the 20-day EMA near $63.07. As long as Silver holds above that level, the uptrend framework stays intact. A break below it would signal a deeper pullback as overbought conditions eventually unwind.

The Bottom Line

So is the bull run over? Not yet. The Fed dovish expectations and market positioning still favor higher Silver prices. But the stretched technical setup and surprisingly strong GDP data inject some caution into the narrative. Traders eyeing the $72.70 resistance should watch for consolidation rather than a straight line higher—that’s just how overextended rallies typically behave before their next leg.