Silver (XAG) Forecast: Bullish Above $42.06, Bearish Breakdown Below $41.68

Silver Eyes Breakout as Traders Test $42.06 Resistance

Silver is holding modest gains going into Friday’s close, but prices remain boxed in between key near-term pivots. With the metal trading between $41.68 and $42.06, the next decisive move could determine whether bulls have the strength to push toward record highs—or whether a pullback is on deck.

The battle at these levels comes as markets digest broader macro developments, including the Federal Reserve’s rate cut and rising U.S. Treasury yields—both weighing on sentiment across metals. Silver’s near-term outlook now hinges on whether it can clear overhead resistance, or if it falls back below recent support levels.

At 12:58 GMT, XAG/USD is trading $42.06, up $0.24 or +0.56%.

Fed Cut Fails to Inspire, Rising Yields Cloud the Outlook

Despite the Fed delivering a 25 basis point cut as expected, silver traders are finding little comfort. Much like gold, silver is grappling with the drag of rising long-term Treasury yields, with the 10-year at 4.131% and the 30-year up at 4.743%. These levels continue to raise the cost of holding non-yielding assets, limiting fresh bullish flow.

The Fed’s messaging didn’t help. Chair Powell downplayed the move as a risk-management measure, rather than the start of a full-blown easing cycle. Traders betting on aggressive stimulus were left disappointed, while the stronger U.S. dollar—up to 97.347 on the DXY—added more headwinds for silver.

Watching $42.06—Can Bulls Power Through?

Technical action remains tight. A strong breakout above $42.06 could trigger buying toward the all-time high of $42.97. That level is now squarely in sight if momentum builds and external pressure eases. But if buyers fail to hold ground above $42.06, silver could revisit $41.68 quickly—and if that gives way, deeper losses toward $41.14 and potentially the $39.96–$39.59 zone may unfold.

Last week’s close at $42.19 also matters. A weekly close below this level would form a potential price top on the charts and could usher in a multi-week correction, though not a full reversal in the broader uptrend.

Gold Outlook Signals Caution, But Citi Sees $3800 Target

Gold’s technical setup is showing similar signs of hesitation. Prices are holding above $3627.96 but remain capped below $3658.03. Without a breakout, metals may struggle to attract aggressive bids. Citi, however, raised its gold forecast to $3800, citing risks around U.S. fiscal health and inflation. That bullish tilt, if realized, could spill over into silver, offering upside momentum—especially if stagflation fears grow.

Silver Forecast: Holding the Line for Now, But Risk Tilts Lower

Silver’s short-term trend remains constructive above $41.68, but momentum is fading beneath $42.06. Unless bulls regain control soon, the risk of a downside move grows, especially if yields remain firm and the dollar holds its ground. A failure to hold $41.14 would open the door to a sharper drop toward $40 and below.

For now, traders should treat $42.06 as the decision point. A break above this level would re-engage bullish interest with eyes on $42.97. Until then, caution is warranted as silver trades at a critical inflection zone.

More Information in our Economic Calendar.