Silver Price Forecast: Strong Dollar Could Drive Silver Toward $50

Silver (XAG) prices remain under pressure as rising U.S. Treasury yields and a stronger U.S. dollar limit the recovery from the key $55 support. In my view, silver may correct toward the $45 to $50 support zone before starting the next major rally toward $90. But a break above $72 would confirm the bottom. This article examines the impact of Treasury yields, the U.S. dollar and industrial demand on silver and identifies the key levels that could determine the next move.

Silver Faces Pressure From Higher Yields and Inflation

Silver price remains under pressure due to the expectations of rising U.S. interest rates and an increase in US Treasury yields. The federal funds rate remained unchanged at 3.50%-3.75% in June. Inflation is also above the Fed’s 2% target due to supply shocks and higher energy prices. This keeps the prospect of higher interest rates and limits the upside in precious metals.

The 10-year US Treasury yields have reached near the 4.70% and look poised to break higher. Moreover, the 10-year TIPS yield rose to 2.44%. The continued rally in yields in July keeps the pressure on gold (XAU) and silver prices. Therefore, any rallies in both metals are limited below their respective resistances.

The inflation data for US remains mixed. U.S. annual inflation rate hit 3.5% in June, down from 4.2% in May. The core inflation also dropped to 2.6%. Producer prices dropped 0.3% for June and annual producer inflation eased to 5.5%. This data shows that the inflation pressure has begun to drop in June.

But the recent escalation in the Middle East has again sent oil prices above $90. The escalation in the Middle East conflict and the higher energy prices could have a domino effect on consumer prices, which could give the Fed less flexibility to loosen policy.

Strong U.S. Dollar Offsets Silver’s Industrial Demand

Another key factor for silver is the U.S. dollar. The US dollar has broken the 100.50 level and continues to rally. The index corrected back to the breakout zone of 100.50 and rebounds higher. The strong rally in US dollar index last week has produced a bullish weekly candle which indicates a continued rally to 104 and higher.

This strength in the US dollar keeps the precious metals under pressure. The dollar has been supported by expectations that the Fed will tighten policy due to the higher energy prices and inflation.

The silver holds industrial demand. China’s manufacturing PMI remained at 51.7 in June, above the cross-over point of 50 that signals expansion.

China production continued to rise, and new orders continue to grow. Stable manufacturing activity is key for silver which has substantial consumption in electronics, solar PV and other industrial needs. Therefore, the demand for investment can be supported by higher industrial demand despite the strong U.S. yields.

This is the reason behind the recent volatility of silver. The price rebounded from the key support of $55 an ounce after a strong drop in 2026. But the safe-haven and industrial demand is weighed against higher real yields, a strong dollar and expectations of tighter monetary policy. In my view, the U.S. dollar and the direction of the Treasury yields will continue to play a major role in the next move of silver.

Silver Technical Analysis Points to $45–$50 Support

The weekly chart for spot silver shows that prices have remained under pressure since May 2026. The price has dropped toward the key support level of $55 and initiated a rebound last week. But the weekly candle last week was a weak candle within the support level.

Therefore, a break below $55 will push spot silver toward the major support level between $45 and $50. This support zone is defined by the bull flag pattern that formed from the April 2025 lows. But if the $45 support level holds, then the next rally in silver will likely be toward $90. A break above $90 will activate the bull flag pattern and open the door for a strong rally toward the $150 area in the long term.

The importance of the current support zone is highlighted in another chart, which shows the formation of an inverted head and shoulders pattern from 2021 to 2024. A breakout above $28 in June 2024 triggered a strong surge to mark a high at $120 in 2026. But the extremely overbought conditions in spot silver triggered profit-taking and initiated a strong correction back toward $50.

The $50 level has been the long-term pivotal level in the spot silver market. If this support level holds, then the next move in spot silver will likely be toward the $90 level. The short term price action is just compressing within the tightening pattern due to the seasonal correction. Therefore, if a new low is formed in July, it may trigger strong rally in the subsequent months.

Silver Risks a Deeper Correction Below $55

The biggest downside risk for silver is a continued increase in U.S. Treasury yields and the U.S. dollar. A continued rise in oil prices and high inflation could cause the Fed to maintain a tight policy stance longer. This may drive up actual yields and decrease demand for precious metals.

A correlation between the U.S. Treasury yield and the gold market was discussed in the previous analysis. It is interesting to note that the silver price also shows a similar correlation with the U.S. Treasury yield.

A strong surge in U.S. Treasury yields from 2020 to 2023 exerted pressure on the gold and silver markets. The silver price remained between $30 and $20. But when the U.S. Treasury yield peaked at 5% in October 2023 and consolidated until February 2026, it triggered a strong surge in the gold and silver markets.

The U.S. Treasury yield shows strong constructive price action after the U.S.-Iran war and shows bullish candles moving higher toward the 5% level. At the same time, gold prices continue to drop after marking their record levels and remain under pressure.

The last monthly candle for June was also negative. This shows that if U.S. Treasury yield continues to rally higher due to inflation expectations, then silver prices may drop further before the next rally. If the silver price breaks below $55, it will increase the likelihood of a further correction towards the $45 to $50 support level.

Industrial demand must also remain healthy for the bull market to prevail. A slowdown in China and declining manufacturing activity could take away one of the biggest sources of support for silver. Meanwhile, continued strength in the dollar may help to limit demand for investments.

Final Words

Silver remains under short term pressure as higher Treasury yields, a strong U.S. dollar and rising oil prices keep the macro environment difficult for precious metals. The $55 level remains the key near term support. A break below this level could extend the correction toward the $45 to $50 zone before the next meaningful recovery begins.

The longer term outlook remains constructive as long as the major support zone holds. Strong industrial demand and future correction in yields could help silver regain momentum. In my view, a recovery from the $45 to $50 area could open the way toward $90, while a break above $90 would strengthen the case for a much larger long term move.

Read more: Silver Eyes $50 After Breaking Below $60