Silver (XAG/USD) extends its strong upside momentum, climbing close to the $113.50 level during the Asian trading session on Wednesday. The rally in the white metal is driven by persistent economic and geopolitical uncertainties, rising expectations of interest rate cuts, and a softer US Dollar. Market participants are now focused on the US Federal Reserve’s policy decision due later in the day.
The US Dollar came under renewed pressure after President Donald Trump commented on Tuesday that the greenback’s value remains “strong,” when asked whether it had weakened excessively. Following these remarks, losses in the US Dollar Index deepened, pushing it to its lowest level since February 2022. The weaker Dollar has provided additional support to USD-denominated assets, including Silver.
Safe-haven demand has also been reinforced by growing concerns over the Federal Reserve’s independence. Trump indicated that he would soon announce his nominee to replace Fed Chair Jerome Powell once his term ends in May. According to Reuters, betting markets currently view BlackRock executive Rick Rieder as the leading candidate.
The Federal Reserve is widely expected to keep interest rates unchanged at Wednesday’s meeting, after delivering three consecutive rate cuts toward the end of 2025. Investors will pay close attention to the post-meeting press conference for clues on the US economic outlook and the future path of monetary policy.
Markets have largely priced in the next rate cut for the second half of 2026, with June seen as the most likely timing. A lower-rate environment typically reduces the opportunity cost of holding non-yielding assets, which remains supportive for precious metals.
However, the risk of near-term profit-taking in Silver cannot be ignored, following gains of more than 200% on a year-on-year basis. “I think silver will put in a high this year that could last for years. When prices move at such velocity, deficits tend to reverse,” said Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence.
