Silver (XAG) Forecast: 50-Day Moving Average in Play as Dollar Surge Pressures Bulls

Silver Tests Key Support as Dollar Strength, Risk-On Sentiment Drag Prices

Silver prices dropped sharply Tuesday, closely mirroring gold’s retreat as the U.S. dollar firmed and geopolitical concerns faded. The decline brings silver within points of a critical technical level, signaling a pivotal moment for short-term direction.

At 11:47 GMT, XAG/USD is trading $32.91, down $0.58 or -1.72%.

Dollar Gains Undermine Precious Metals

The U.S. dollar index climbed 0.3%, reversing earlier losses and applying downward pressure on dollar-denominated commodities. A stronger dollar makes silver more expensive for non-U.S. buyers, reducing demand. The move followed U.S. President Trump’s softening stance on European trade tariffs, which boosted equity markets and curbed demand for safe-haven assets like silver and gold.

Silver’s correlation with gold and the broader risk sentiment has tightened, and Tuesday’s sell-off reinforces that trend. The drop follows gold’s second consecutive session of losses, driven by reduced geopolitical tension and technical breakdowns under key resistance levels. Ole Hansen of Saxo Bank pointed to “reduced haven demand and rising stock markets” as key drivers in bullion’s weakness — a read-across that clearly applies to silver as well.

Technical Breakdown: Is the 50-Day Average in Play?

Silver has now approached the 50-day moving average at $32.70 — a critical level for short-term bulls. A decisive break below would likely trigger further selling, with the 200-day moving average at $31.50 becoming the next major support target. On the flip side, resistance stands at $33.70, last week’s high and the same level as the April 24 peak. A breakout above would set sights on the March 27 high of $34.59, followed by longer-term barriers at $34.87 and $35.40.

Fed Signals and Inflation Data Could Influence Next Move

Markets are now eyeing comments from Federal Reserve officials and the upcoming U.S. core PCE inflation report. Traders are currently pricing in 47 basis points of rate cuts by year-end, with the first likely in October. Dovish remarks or a weaker inflation reading could reintroduce support for precious metals, especially if real yields ease in response.

Until then, both gold and silver remain under pressure. Rhona O’Connell of StoneX notes that while gold is consolidating, “uncertainty will keep prices supported.” That same logic applies to silver — technical levels and Fed tone will dictate whether buyers step back in.

Silver Outlook: Immediate Pressure with Support Test Ahead

With silver near the $32.70 mark, traders should brace for heightened volatility. A clean hold at this support could attract dip-buying, especially if inflation data disappoints or rate cut expectations intensify. However, a breakdown exposes silver to a deeper retracement toward $31.50. Until clearer guidance emerges from the Fed, the near-term tilt remains bearish.

More Information in our Economic Calendar.