Silver (XAG) Forecast: Bulls Buy the Dip as Silver Bounces Off $35.40 Support

Silver Rebounds After Sharp Early Drop—Traders Step In at Key Support

Silver saw volatile action Thursday, dropping sharply in early trade before staging a strong rebound. The metal briefly dipped toward technical support levels but found solid buying interest as it neared the former breakout zone around $35.40. That intraday reversal signals traders remain confident in the broader trend, opting to buy weakness rather than chase strength above resistance at $36.89.

At 11:37 GMT, XAG/USD is trading $36.30, up $0.05 or +0.15%.

“Buy the Dip” Behavior Returns as Support Holds

The swift recovery from session lows highlights the growing importance of $35.40 as a support level. Additional downside protection is seen at $34.87. Thursday’s action strongly suggests that traders are positioning for further upside by accumulating near established levels, rather than waiting for breakout confirmation above recent highs. The pattern reflects tactical buying ahead of what many expect to be renewed momentum.

Rate Cut Bets and Soft Dollar Keep the Bull Case Intact

Broader macro conditions remain supportive. This week’s softer-than-expected CPI data showed inflation rising just 0.1% in May, undercutting Treasury yields and pushing the dollar to a two-month low. Markets are pricing in at least 50 basis points of Fed rate cuts this year, reducing the cost of holding non-yielding assets like silver and gold. This backdrop continues to underpin bullish positioning across the precious metals space.

Profit-Taking Rotation Into Gold May Be Temporary

Some profit-taking is evident in silver, with capital briefly rotating into gold, which continues to push toward resistance near $3403.63. However, silver’s quick rebound suggests any outflows are likely tactical. Gold’s rise, driven by safe-haven demand and geopolitical concerns, is seen as complementary rather than competitive in the broader precious metals rally.

Forecast: $38 Within Reach, $40 Possible on Dollar Weakness

UBS remains bullish, forecasting silver at $38/oz in the coming months, with a possible test of $40/oz if the U.S. dollar remains soft and physical deficits persist. Price action continues to support that outlook—buyers are stepping in aggressively at key levels, signaling confidence. As long as support zones like $35.40 and $34.87 continue to attract bids, the upside case remains intact.

More Information in our Economic Calendar.