Silver (XAG) Forecast: $38.51 Becomes Key Level in Near-Term Silver Outlook

Silver Dips from 14-Year High as Market Awaits Fed Clarity and Trade Developments

Silver prices are edging lower early Friday, posting a third straight daily decline after reaching a 14-year high of $39.53 earlier this week. The metal is trading within a short-term range between $37.50 and $39.53, with $38.51 acting as a key pivot level. Price action around this midpoint is expected to guide near-term direction as traders weigh safe-haven demand against improving risk sentiment.

At 05:15 GMT, XAG/USD is trading $39.00, down $0.05 or -0.14%.

Safe-Haven Appeal Pressured by Trade Optimism and Solid U.S. Data

Strength in U.S. equities and signs of easing global trade tensions have cooled investor appetite for defensive assets like silver and gold.

Washington’s recent trade deal with Japan and ongoing negotiations with the European Union—potentially involving a 15% baseline tariff with exemptions—have stoked optimism. Aakash Doshi of State Street noted that “low volatility and firm equity markets” are weighing on precious metals.

Meanwhile, stronger-than-expected jobless claims data pointed to a stable labor market, lifting the 10-year Treasury yield to 4.402% and supporting risk-on positioning. The claims came in at 217,000 for the week ended July 19, below both the previous week’s total and consensus forecasts. However, weak new home sales and mixed PMI data continue to temper the bullish economic narrative.

Trump’s Fed Visit Sparks Policy Uncertainty

President Trump’s surprise visit to the Federal Reserve on Thursday—his first as sitting president—highlighted ongoing tensions between the White House and Fed Chair Jerome Powell. Trump again pushed for lower interest rates and questioned Powell’s leadership, particularly citing cost overruns in a multi-billion-dollar Fed building renovation.

Though markets expect no policy change at next week’s Fed meeting, the political pressure adds a layer of uncertainty to future rate decisions. Rate cuts—likely later this year—would support silver prices by reducing opportunity costs of holding non-yielding assets.

Tariff Fears Fuel Silver Premiums and Spot Market Tightness

Trump’s proposed 50% import tariffs on copper from August 1 and broader tariff policy have indirectly boosted silver’s spot market tightness. While silver itself remains exempt, the resulting dislocations in industrial metals have widened the premium between U.S. futures and London benchmarks. This has driven lease rates higher and supported silver’s rally to $39.53.

Silver is up 36% year-to-date, outperforming gold’s 31% gain. Analysts attribute the move to a mix of robust industrial demand, strong investor flows, and silver’s relative affordability as a gold alternative. With a structural supply deficit in play for the fifth year running, physical tightness continues to support bullish positioning.

Short-Term Outlook: Eyes on $38.51 Pivot for Next Move

Traders are watching the $38.51 pivot closely. A sustained move above this level would indicate continued “buy the dip” sentiment, potentially setting up a retest of $39.53 and a push toward $40.00. Failure to hold $38.51 could invite downside pressure toward $37.50, with a break below that level signaling a shift to a bearish trend.

Until then, silver remains caught between two narratives: rate uncertainty favoring safe-haven demand, and improving trade conditions drawing capital into risk assets. The next move hinges on whether buyers defend support or momentum fades further.

More Information in our Economic Calendar.