Silver Price Forecast: XAG/USD surges above $41, hits 14-year high

• Silver extends rally after clearing $40.00, reaching $41.46, its highest level since September 2011.
• Markets bet on Fed delivering 25 bps cut, as labor data weakness deepens FOMC divisions ahead of September.
• RSI nears overbought territory; break above $42.00 opens path toward $43.38 and $44.22 long-term resistance.

Silver Price advances for the second consecutive day after clearing the $40.00 barrier on Tuesday, rises over 2.80% on Wednesday, trading at $41.18, after reaching a 14-year high of $41.46.

Traders bought the precious metal as they seem convinced that the latest round of economic data, particularly US jobs data, warrants a 25-basis points rate cut by the Fed at the upcoming September meeting. This, alongside a growing division amongst the Federal Open Market Committee (FOMC) board, suggests that all subsequent meetings would all be alive.

XAG/USD Price Forecast: Technical outlook

Silver rally resumed on Tuesday and extended on Wednesday, past the $41.00 figure. Although the Relative Strength Index (RSI) seems to enter overbought territory, it remains shy of cracking the 80-level seen as the most extreme overbought condition.

If XAG/USD climbs above $42.00, traders could expect a move toward the September 2011 high at $43.38. If surpassed the next stop would be August 2011 peak at $44.22.

Conversely, if Silver tumbles below $41.00, the grey metal could retrace towards the September 2 low of $40.15. A breach of the latter will expose $40.00.

XAG/USD Price Chart - Daily