Money surges toward the $39 target amid pressure to cut the Fed's interest rates independently

Silver prices moved higher by more than 0.5%, reaching $38.80 per troy ounce this Thursday morning, with a clear target of $39. The main driver of this increase is the rising likelihood of a Federal Reserve interest rate cut in the near future. Non-yielding metals like silver tend to benefit significantly from low interest rate environments, as they reduce the opportunity cost of holding these assets.

The Fed and the clearer rate cut outlook

The CME FedWatch tool, which gauges market expectations for Fed policy, shows an 88% probability of a 25 basis point rate cut. This is up from just 82% last week. This indicates growing market confidence in a rate easing.

NY Fed President John Williams said on Wednesday that policymakers need to assess incoming economic data before deciding on a rate cut. While he acknowledged that a rate reduction might be necessary at some point, this policy shift is happening in the context of President Biden’s efforts to exert more influence over the central bank. Traders are currently watching the upcoming US Q2 GDP release today and next month’s PCE index, which is a key inflation measure for the Fed.

Solar energy industry demand as a key support

Beyond monetary policy factors, industry demand plays a crucial role in supporting silver prices. China expanded its solar capacity by about 93 GW in May last year, a 300% year-over-year increase, before policy changes that are expected to slow new solar panel connections.

This demand isn’t limited to China. Chinese solar cell exports surged over 70% in the first half of 2025, driven by strong renewable energy demand from India and other countries. Silver, used in the conductive coatings of solar cells, benefits from this industry growth trend.

Key figures and the $39 target

In summary, key factors to watch include the 88% probability of a 25 basis point rate cut and the growth of the solar industry boosting silver demand. Silver prices are moving toward the $39 target supported by policy and industry fundamentals. If interest rates decline as expected and demand from high-tech sectors remains strong, the $39 level could be an important milestone for further price gains.