Silver Price Forecast: XAG/USD Rebound as The Fed Is Still Unconvinced About Interest Rate Prospects

• Silver prices are trying to recover while the negative bias remains strong due to the strength of the US Dollar.

• The Fed's Waller said more economic data is needed to state that the Fed has finished raising interest rates.

• Silver price produced a mean-reversion movement near the 20 EMA around $23.80.

At the onset of the New York trading session, Silver's (XAG/USD) price encountered significant buying interest around $23.50. The precious metal is currently attempting a recovery aftermath of a substantial sell-off, primarily caused by the steadfastness of the US Dollar. On a larger spectrum, the outlook stays pessimistic as predictions of the US Dollar Index (DXY) persisting on its upward trend continue.

The S&P500 opened with a negative note because market sentiment is still cautious due to the deepening risk of a global recession. The US dollar benefited from gloomy global data, especially China's weak Services IMP. Economic data for August dropped significantly to 51.8 compared to the previous release of 54.1. China's service sector faces the pressure of deflation risk due to worsening demand conditions.

The US Dollar Index faced profit-taking action after hitting a new five-month high near 104.80 because Federal Reserve Governor (The Fed) Christopher Waller is still not confident about the interest rate outlook. The Fed governor told CNBC on Tuesday that economic data will guide whether the Fed needs to raise interest rates again and added that he will need more data to say the Fed is done raising interest rates, as reported by Reuters. He further added that one more increase in interest rates is unlikely to lead the economy into recession.

Regarding the labor market, the Governor of The Fed stated that the higher Unemployment Rate is not surprising. The labor market has started to weaken but is still very strong.

Silver Technical Analysis

The movement of silver prices is presenting a mean reversion near the 20-period Exponential Moving Average (EMA) at approximately $23.80. The asset is attempting to recuperate following an examination of the 50% Fibonacci retracement, charted from the low of $22.23 on August 15 to the peak of $25.02 on August 30, at $23.62.

Furthermore, the Relative Strength Index (RSI) has escalated to a 40.00-60.00 spectrum from the earlier bearish range of 20.00-40.00. This suggests a weakening in the bearish momentum.