Silver Price Forecast: XAG/USD rebounds above $31.50 ahead of Fed policy decision

• Silver price recovers slightly after a bloodbath on Wednesday with Fed policy on the horizon.
• The Fed is expected to cut interest rates by 25 bps to 4.50%-4.75%.
• Silver price sees key support near $29.00 if it weakens further.

Silver price (XAG/USD) bounces back above $31.00 in Thursday's North American session after a sharp nosedive move on Wednesday. The white metal stays vigilant with investors focusing on the Federal Reserve's (Fed) monetary policy decision, which will be announced at 19:00 GMT.

The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. This would be the second interest rate cut by the Fed this year. The Fed started the policy-easing cycle in September, however, the rate-cut size was 50 bps.

Ahead of the Fed's policy, the US Dollar Index (DXY), which gauges Greenback's value against six major currencies, tumbles to near 104.60. The USD index retraces almost half of Wednesday's rally, which was inspired by Republican Donald Trump's victory in United States (US) presidential elections. 10-year US Treasury yields drop to near 4.41%.

Investors will pay close attention to the press conference of Fed Chair Jerome Powell's speech to get cues about the impact of Trump's victory on inflation and the interest rate outlook. Trump vowed to raise import tariffs and lower corporate taxes, which could boost inflationary pressures and labor demand.

Silver technical analysis

Silver price slides to near $31.00 after breaking below the horizontal support plotted from the May 21 high of $32.50. The near-term trend of the Silver price has turned bearish as it has dropped below the 50-day Exponential Moving Average (EMA), which trades around $31.60.

The asset could find support near the upward-sloping trendline around $29.00, plotted from the February 28 low of $22.30.

The 14-day Relative Strength Index (RSI) dives to near 40.00. Should RSI (14) fall below 40.00, a bearish momentum will be triggered.

Silver daily chart