Silver Price Forecast: XAG/USD stalls below $38.50 as the USD sell-off stops

• Silver keeps trading higher, but $38.50 support is holding bulls for now.
• Rumours that Governour Waller might be the next Fed Chair have provided some support to the USD.
• On Thursday, St. Louis Fed Governour Bostic said that it is too early to commit to a rate cut in September.

Silver (XAG/USD) is trading higher on Friday and on track for a 3.5% weekly rally from $31.20 lows, but the precious metal is struggling to find acceptance in the upper range of the $38.00s, which might lead to some bearish correction.

The Fundamental background remains favourable, with recent US data putting pressure on the US Dollar to lower interest rates, but comments from St Louis Fed President Raphael Bostic warning about the inflationary impact of Trump's tariffs have eased hopes of a September cut, providing some support to the US Dollar.

Beyond that, news reports by Bloomberg suggesting that Fed Governor Christopher Waller might have convinced Trump's team to be the best candidate to replace Jerome Powell as Fed Chairman have been welcomed by the market,  providing some support to the US Dollar.

Markets are hesitant with the Fed in the spotlight

On the other hand, rumours that Stephen Miran will fill Adriana Kugler's vacancy in the Fed's Government Board are seen as a move to increase the doves' side, aiming to bend the bank's stance towards a more accommodative monetary policy.

 On the macroeconomic front, US Jobless claims rose twice as expected in the last week of July, showing a 226,000 reading from the previous week's 218,000 claims. These readings exceed investors' expectations of a moderate increase, to 221,000, and add to the evidence of a weakening labour market.

The US Dollar Index, which measures the Greenback against a basket of the most traded currencies, has depreciated more than 2% from Friday's highs, but a potential double bottom, at the 98.00 area, and a bullish divergence suggest the possibility of some recovery, which would increase bearish pressure on precious metals.