Silver Price Forecast: XAG/USD steadies ahead of Fed interest rate decision

• Silver trims earlier losses after dipping to a five-day low, with traders cautious ahead of the Fed's interest rate decision.
• The Fed is expected to cut rates by 25 bps, with Powell's guidance likely to shape the near-term path for markets.
• Momentum indicators show consolidation, with RSI at 64 and ADX at 34 keeping the broader uptrend intact.

Silver (XAG/USD) trims some of its earlier losses on Wednesday after dipping to a five-day low, with traders reluctant to take fresh positions ahead of the Federal Reserve's (Fed) interest rate decision at 18:00 GMT.

The white metal hit a fresh 14-year high of $42.97 on Tuesday before retreating, pressured by profit-taking and a steadier US Dollar (USD). At the time of writing, XAG/USD trades around $41.90, down nearly 1.70% on the day, with markets squarely focused on the Fed's first expected rate cut of 2025.

The Fed is widely anticipated to lower the federal funds rate by 25 basis points to the 4.00%-4.25% range. While this move is fully priced in, the spotlight will fall on the updated dot plot and Fed Chair Jerome Powell's press conference for clues on the pace and depth of the easing cycle. A dovish tone could reignite safe-haven demand and drive Silver back toward recent highs, while a more measured message risks extending the pullback below $41.50.

From a technical perspective, Silver is trading near the midpoint of its rising channel, which coincides with immediate support at $41.50. A sustained hold above this zone would help preserve bullish momentum, with upside targets at $42.50 and the $42.97 peak. Beyond that, a decisive breakout could pave the way for a move toward the psychological $44.00 handle.

On the downside, stronger support is layered around $39.50, where a confluence of factors, including the rising channel's lower boundary, a horizontal resistance-turned-support level, and the 50-day Simple Moving Average (SMA), form a critical base. A breakdown through this cluster would mark a shift in market structure and expose deeper losses.

Momentum indicators reflect consolidation after a strong run. The Relative Strength Index (RSI) has eased to around 64, cooling from overbought territory but still supportive of an uptrend. Meanwhile, the Average Directional Index (ADX) at 34 confirms that trend strength remains firm. This combination suggests that Silver is in a holding pattern, awaiting the Fed's policy signal as the catalyst for the next directional move.