Silver (XAG) Forecast: Bulls Eye Dovish CPI to Power Break Above $37.87 Pivot

Silver Traders Eye Inflation Data as Key Technical Levels Come Into Play

Silver prices are pushing higher on Tuesday ahead of the U.S. consumer inflation report due at 12:30 GMT, with traders positioning around critical chart points. The metal’s 50% retracement level at $37.87 is the short-term pivot to watch, while the 50-day moving average at $37.10 remains the main intermediate-term trend indicator.

At 12:15 GMT, XAG/USD is trading $37.73, up $0.12 or +0.31%.

A sustained break above $37.87 could spark a run toward last week’s high at $38.51, which in turn could open the door to challenge the 14-year high at $39.53. Failure to clear $37.87 would be a bearish signal, raising the risk of a pullback toward $37.10. If that support gives way on strong selling, the next target would be the July 31 main bottom at $36.21.

Inflation Report Set to Test Market Sentiment

Economists expect July’s Consumer Price Index (CPI) to show a 2.8% annual increase, up from 2.7% in June, marking the highest reading since February. Core CPI, which strips out food and energy, is forecast to accelerate to 3.1% from 2.9%. The uptick is being driven largely by tariff-related cost pressures on items like appliances, clothing, cars, and some foods, though rent growth is likely to have eased.

Tariffs have been a slow-burn factor for consumer prices, initially softened by companies stockpiling goods and delaying price hikes. But analysts note that importers are now feeling the strain, and more of these costs are filtering through to consumers.

Federal Reserve Caught Between Inflation and Growth Risks

The Federal Reserve’s policy stance could be tested by today’s numbers. A hotter CPI reading may keep the Fed’s benchmark rate at 4.25%-4.50% for longer, as officials aim to prevent inflation from reaccelerating. However, weaker labor market data has increased calls for rate cuts to protect against rising unemployment.

Markets currently assign an 86% probability of a September rate cut, according to CME FedWatch data. Analysts suggest that an in-line inflation report would leave those odds largely unchanged.

Short-Term Silver Outlook

With inflation data looming, silver’s immediate direction hinges on the $37.87 resistance level. A breakout could quickly draw momentum buying toward $38.51 and possibly $39.53. Conversely, rejection at $37.87 would shift focus to $37.10 and then $36.21.

Traders should expect heightened volatility at the release time, with inflation numbers likely dictating whether the metal resumes its climb or sees profit-taking set in.

More Information in our Economic Calendar.