Silver (XAG) Forecast: Bulls Eye $40 as Dollar Softens and Gold Holds Support

Silver Reclaims Momentum Near $39 as Gold Steadies, Dollar Softens

Silver prices extended their recent rally on Friday, climbing to $38.40 and trading just shy of July 14’s high at $39.13. The metal has rebounded firmly off support at $37.50, buoyed by a softening U.S. dollar, firmer gold prices, and ongoing geopolitical tailwinds.

While silver is typically more volatile than gold, it often follows the broader direction of the yellow metal, which has held above $3,350 despite resistance near $3,377. Continued resilience in gold has reinforced a supportive base for silver, especially as U.S. rate cut expectations moderate.

Federal Reserve in Focus as Strong Data Caps Rate Cut Bets

Stronger-than-expected U.S. retail sales and a drop in jobless claims have tempered expectations for aggressive Federal Reserve easing, with markets now pricing in roughly 45 basis points of cuts for the rest of the year. This pullback from earlier, more dovish pricing (50 bps) has kept Treasury yields elevated, limiting gold’s and, by extension, silver’s upside.

However, the U.S. dollar index slipped 0.4% intraday Friday, reducing immediate headwinds for dollar-denominated metals. Treasury yields, while still high, eased slightly with the 10-year dipping to 4.425%, offering some room for precious metals to grind higher in the near term.

Geopolitics and Gold Support Broader Precious Metals Bid

Safe-haven demand remains underpinned by global tensions, especially after the EU approved a fresh round of sanctions on Russia targeting the energy sector. This has helped gold and silver retain firm underlying support, even as macroeconomic strength tempers speculative upside.

Gold’s resilience above $3,324—its 50-day moving average—lends psychological and technical support to silver’s current bid. The bullish tone in gold, although capped, is filtering into silver positioning, especially as traders hedge geopolitical risk.

Technical Picture for Silver: Breakout or Pause?

Silver has bounced from a key pivot zone at $37.50, recovering quickly from the July 16 pullback. The 50-day and 200-day SMAs—now at $35.50 and $32.67, respectively—are well below current price levels, confirming a strong uptrend.

Immediate resistance remains at $39.13, the June high. A decisive breakout could open the path toward the psychological $40 level. On the downside, $37.50 serves as first-line support, with a breach risking a return toward the $35.28 swing low.

Silver Market Forecast: Consolidation Likely Before New Highs

Silver is holding firm in a bullish structure, with higher lows forming above key support and no technical signs of reversal. However, without a breakout above $39.13 and gold pushing decisively through $3,377, the metal may consolidate in the $37.50–$39.00 range short term. Traders should watch for fresh catalysts—especially U.S. sentiment data and Fed commentary—for direction. Until then, the bias remains bullish above $37.50.

More Information in our Economic Calendar.