Silver (XAG) Forecast: Bearish Below $38.51 Resistance—Is 50-Day MA the Next Support Test?

Silver Slips Below Resistance as Fed, China Industrial Demand Cast a Shadow

Silver prices edged lower Tuesday, as the metal struggled to hold recent gains and bearish momentum picked up near the $38.51 pivot—now established resistance. The move comes just hours ahead of the Federal Reserve’s policy decision, keeping both precious and industrial metals in a holding pattern. Weaker industrial sentiment from China is also pressuring the silver market, adding to the cautious tone.

Fed Tone Critical for Metals—But Can Powell Spark a Rally?

Gold’s modest recovery on Wednesday, following a sharp $137.28 correction over four sessions, reveals traders are watching the Federal Reserve with increasing focus.

With futures markets assigning a 98% chance that rates stay unchanged at 4.25%–4.5%, attention shifts squarely to Chair Powell’s post-decision press conference. Deutsche Bank analysts suggest Powell is unlikely to commit to rate cuts but may leave the door open.

If Powell leans dovish, both gold and silver could benefit—though elevated Treasury yields remain a cap for now, with the 10-year note at 4.328%.

Silver often tracks gold during major monetary policy moments, but its dual role as an industrial metal introduces another layer: soft Chinese demand.

Concerns about sluggish factory output and lagging PMI figures are weighing on sentiment. Unlike gold, silver lacks the full defensive bid, making it more exposed to economic softness from Asia.

At 12:17 GMT, XAG/USD is trading $37.90, down $0.31 or -0.80%.

Dollar Pullback Supports Metals—but For How Long?

The U.S. Dollar Index retreated from a five-week high, easing 0.13% to 98.774. The softer dollar gave gold some breathing room and offered temporary support to silver. However, unless this pullback extends, dollar pressure could quickly return, especially if Powell downplays the case for near-term easing. A stronger dollar environment would be another headwind for silver’s recovery.

Technical Pressure Builds Below $38.51—Watch $37.50 and the 50-Day

Technically, silver has turned bearish below $38.51. The next downside target is the July 16 bottom at $37.50. A break of that level opens the door to the 50-day moving average at $36.40. On the upside, a return above $38.51 would be needed to regain bullish control, with $39.53 as the next major resistance and $40.00 looming as a psychological barrier.

Silver Forecast: Bearish Tone Likely to Persist Until Fed Clarity

Unless Powell delivers a convincingly dovish message, silver looks vulnerable to further downside. The market’s inability to hold above $38.51 and concerns around Chinese industrial demand suggest limited upside until macro conditions improve.

A retest of $37.50 appears likely, with deeper selling possible if support gives way. Traders should remain tactical, watching both the Fed’s tone and China’s next economic releases for cues.

More Information in our Economic Calendar.