Silver Price Forecast: XAG/USD slumps to near $48.00 as traders lock in profits

• Silver price falls to near $48.10 in Wednesday’s early Asian session. 

• Silver faces some selling pressure, marking the biggest decline in more than a dozen years, as traders locked in profits. 

• The ongoing US government shutdown and Fed rate cut bets might cap the downside for XAG/USD. 

Silver price ( XAG/USD) extends the decline to around $48.10 during the early Asian session on Wednesday. The white metal remains under pressure after facing its steepest sell-off in years in the previous session as traders locked in profits. 

Silver tumbled more than 8% to mark its largest daily drop since 2021, amid concerns that the recent record high in the white metal left it overvalued. Additionally, easing trade tensions between the United States (US) and China lifts the US Dollar (USD) and undermines the USD-denominated commodity price. 

US President Donald Trump last week threatened a new 100% tariff on China and suggested he would skip a meeting with Chinese President Xi Jinping to be held in South Korea later this month. Trump softened his stance over the weekend, saying that high tariffs on China are unsustainable, and expressed willingness for smoother relations with China. Trump late Wednesday noted that an upcoming meeting with his Chinese counterpart would yield a “good deal” on trade.  

On the other hand, the ongoing US government shutdown, geopolitical risks and the expectation of the Federal Reserve (Fed) rate cuts could boost the safe-haven assets like Silver. The US federal government shutdown has entered its fourth week with no clear end in sight, marking the third-longest funding lapse in modern history. The GOP-backed bill failed to pass the Senate for the 11th time on Monday.

Traders are currently pricing in nearly a 99% possibility that the US central bank will cut interest rates again next week, followed by another reduction in December, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal.