Silver Price Forecast: XAG/USD finds support near $30, but remains weak on strong Dollar

• Silver price remains above $30.00 but is prone to further declines amid multiple headwinds.
• The US dollar strengthens as the Fed supports keeping interest rates at their current levels for longer.
• The strong US economic outlook has negatively affected the Fed's rate cut prospects for September.

The price of Silver (XAG/USD) finds temporary support near the psychological support of $30.00 in the European session on Friday after witnessing heavy selling in the last two sessions. The outlook for the Silver price remains uncertain as investors are losing confidence in the Federal Reserve (Fed) returning to policy normalization at its September meeting.

CME's FedWatch tool shows the probability of rate cuts in September has dropped to 53% from 64% a week ago. The tapering of the Fed's rate cut bets is a result of the Fed's hawkish comments on interest rates and the optimistic economic outlook for the United States (US). Fed officials have been communicating the need to keep interest rates at their current levels for a longer period until they get evidence that inflation will sustainably return to the desired rate of 2%.

The US economic outlook has improved as S&P's first global PMI report for May showed both manufacturing and services PMIs surprisingly surpassed their previous readings.

Chris Williamson, Chief Economist at S&P Global Market Intelligence, commented: “The US economic recovery has accelerated again after two months of slower growth, with early PMI data pointing to the fastest expansion in just over two years in May. The data puts the US economy back on track for another strong GDP increase in the second quarter.

The US Dollar Index (DXY) is showing strength near 105.00 due to the Fed's hawkish stance on the interest rate outlook and the firm US economic outlook. Looking ahead, investors will focus on April Durable Goods Orders, which will be released at 12:30 GMT. New orders for durable goods are estimated to have decreased by 0.8% after increasing by 2.6% in March.