Silver Price Forecast: XAG/USD recovers strongly above $30 as Fed dovish bets swell

• Silver price bounces back sharply to near $30.30 as market expectations for the Fed to cut interest rates in June have swelled.
• Fed Powell warned that Trump tariffs could lead to higher inflation and unemployment.
• The demand outlook of Silver as an industrial metal has weakened.

Silver price (XAG/USD) is up almost 2.4% near $30.30 during North American trading hours on Monday. The white metal bounces back strongly after a bloodbath on Thursday and Friday as traders have become increasingly confident that the Federal Reserve (Fed) could cut interest rates in the June meeting.

According to the CME FedWatch tool, traders have completely pared their bets favoring an interest rate reduction in June.

Traders have raised Fed dovish bets as Fed Chair Jerome Powell has signaled concerns over the United States (US) economic outlook after President Donald Trump swept reciprocal tariffs on all of its trading partners.

"We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation," Powell said on Friday.

However, the industrial demand of Silver has turned sluggish as Trump tariffs have stemmed concerns over the global economic outlook, especially of China, which has been slapped 54% tariffs.

Silver has applications in various industries, such as Electric Vehicles (EV), electronics, and solar energy. Given that China is the manufacturing hub of the world, a higher degree of tariffs on them impacts its manufacturing sector, which eventually hits Silver's demand.

Theoretically, heightening global economic tensions increase of the appeal of precious metals, such as Silver, but fears of slowdown in its industrial demand weighs on its price.

Silver technical analysis

Silver price recovers to test the breakdown region of the Ascending Triangle chart formation near its upward-sloping border around the August 8 low of $26.45. The horizontal resistance of the above-mentioned chart pattern is plotted from the October 22 high of $34.87

Technically, the breakdown of the Ascending Triangle pattern indicates results in a volatility expansion, which leads to higher volume and formation of wide ticks.

The 14-day Relative Strength Index (RSI) rebounds slightly after turning oversold around 27.00. This indicates that the recovery move appears to be a short-lived one, and investors should brace for more weakness.

Looking down, the August 8 low of $26.45 will act as key support for the Silver price. While, the April 4 high of $32.00 will be the major barrier.

Silver daily chart