Silver (XAG) Forecast: $66.51 Pivot Holds the Key to Silver’s Next Move

Silver Gives Back the Early Bid as the Rate Trade Takes Over

Silver reached $66.48 Tuesday morning and could not hold it. The metal gave back more than $1.50 into the afternoon because oil climbing toward $88 is feeding straight into the inflation side of the Fed argument, and nobody wants to own a rate-sensitive metal ahead of Wednesday’s CPI with hike odds rising. The failure came right at the midpoint between the 50-day and 200-day moving averages, which makes the level a clean rejection until buyers prove otherwise.

At 16:08 GMT, Spot Silver was trading at $64.88, down $0.86 or 1.31%. The session high was $66.48 and the low was $64.23.

Gold is holding steadier near $4,379 after reaching $4,435.25 earlier. Silver underperforming the larger metal on a day with active Middle East risk tells you the market is trading the rate consequence of the conflict, not the defensive bid.

The $66.48 Failure Tells You Where the Conviction Is

Silver had every reason to hold that level. Yields were flat to slightly lower, the Hormuz risk was still in the market and gold was holding its morning gains. Buyers could not get it done. The pullback from $66.48 to $64.23 says traders are not willing to pay up before they see what CPI prints.

September hike odds rose to 48% from 44% Monday. The move is small but the direction matters more than the size when the market is this close to a major inflation print. Silver does not need a yield spike to come under pressure. It just needs the market to keep pricing a Fed that is not done.

Oil Near $88 Is Working Against Silver, Not for It

Silver traders already know what higher crude does to the inflation outlook. WTI near $83 and Brent near $88 with the Strait of Hormuz still restricted is the combination that keeps the rate trade alive regardless of what the labor market showed Friday. The geopolitical risk that would normally bring buyers into the metal is instead giving the Fed cover to keep talking about hikes.

Tuesday’s price action confirmed it. Silver sold off while oil rallied. Until crude stops climbing, the inflation argument overrides the defensive bid.

CPI Wednesday Is the Only Print That Changes This

A soft number takes pressure off hike odds, pulls the rate argument back from the edge and gives buyers a reason to revisit $66.48. That is the outcome silver needs after failing to hold the morning high.

A hot number with oil already near $88 gives sellers everything they need. Producer prices land Thursday, so even a favorable CPI may not settle it for long. But Wednesday’s print decides whether silver gets another chance at the high or whether sellers stay in control through the rest of the week.

Daily Spot Silver (XAGUSD) Technical Analysis

Spot silver is edging lower at the mid-session on Tuesday after giving back earlier gains. The rally stalled early in the session at $66.48. The price came in near the mid-point of the 50-day moving average at $61.75 and the 200-day moving average at $71.26.

The actual mid-point between the two indicators is $66.51. Let’s call that the pivot that will determine the direction of the last major move. A sustained move over $66.51 will indicate the presence of buyers.

If this generates enough upside momentum, we could see a near-term surge into the 200-day MA at $71.26 or a long-term 50% level at $72.08. A sustained move under $66.51 will signal the presence of sellers. This could fuel a near-term break into the 50-day MA at $61.75 or the long-term 50% level at $60.835.

What to Watch

Silver is stuck between oil pushing inflation expectations higher and a CPI print that could reverse the pressure. The failure at $66.48 showed that buyers are not willing to lead ahead of the data, and rising hike odds say the rate trade is not going away on its own. Wednesday’s number is the catalyst. Soft inflation reopens the bid. Hot inflation keeps oil and the Fed in control.

The rejection at the midpoint between the 50-day and 200-day moving averages makes $66.51 the level that defines the next move. A push above it targets the 200-day. A sustained failure keeps sellers pointed toward the 50-day.

More Information in our Economic Calendar.