Silver (XAG) Forecast: Break Below $38.51 Puts 50-Day Moving Average in Play

Silver Sells Off After Losing $38.51 Pivot, Tracks Gold Lower

Silver prices dropped sharply on Friday, posting an intraday low of $37.95 before settling at $38.16, after breaking below a key pivot level at $38.51. The move signals a shift in near-term momentum, even as the broader uptrend remains technically intact for now.

The decline came in tandem with gold, where spot prices slipped 0.9% to $3,336.01, and U.S. futures settled at $3,335.60. Both metals moved lower as the dollar strengthened and investor appetite for risk assets grew.

Trade Deal Optimism Drains Safe-Haven Demand in Silver and Gold

Silver’s correlation with gold remains firm, and Friday’s decline reflected the broader pressure on precious metals. Optimism over a potential U.S.-EU trade deal, following this week’s finalized U.S.-Japan agreement, has softened safe-haven demand. Capital has rotated back into equities, driven by expectations of improving trade conditions and reduced geopolitical uncertainty.

Dollar Strengthens on Labor Data, Weakening Case for Fed Cuts

The U.S. Dollar Index (DXY) also rebounded, supported by jobless claims falling to a three-month low. The stronger labor data has further reduced expectations for a rate cut at next week’s Federal Reserve meeting, with the market largely pricing in a hold at 4.25%–4.50%. As inflation begins to show due to import tariffs, the Fed has little incentive to ease further in the near term—keeping pressure on gold and silver.

Support Levels Come into View: $37.50, $36.16, and the 50-Day

The drop through $38.51 has opened the door for a potential test of the July 16 low at $37.50. If that level breaks, swing chart analysis points next to the July 7 bottom at $36.16.

Crucially, the 50-day moving average sits at $36.10, a level viewed by many as fair value. A clean test could attract dip buyers, particularly those looking for entries on longer-term strength.

If buyers fail to defend $36.10, downside risk expands toward the previous support zone in the $34.00–$35.00 range. That area served as a springboard earlier this summer and could come back into play.

Can Gold and Technical Value Buys Halt the Pullback?

With silver momentum now tilting lower, traders should watch gold for cues. If gold stabilizes near $3,300, silver could attract support, particularly around the $36.10–$36.16 area. Holding above these levels keeps the broader bullish structure intact.

The focus now is on whether $37.50 can hold. A break below would confirm bearish intent short-term. But if value buyers step in near the 50-day average, the market could stabilize quickly.

More Information in our Economic Calendar.