Silver (XAG) Forecast: Can the Fed Spark a Break Above $36.89 and Sustain the Rally?

Silver Pulls Back After 13-Year High—But Trend Remains Intact

Silver posted a volatile week, briefly spiking to a 13-year high of $36.89 before retreating for four consecutive sessions and closing near $36.31. The pullback followed a clean breakout above key resistance levels at $34.87 and $35.40, which now serve as pivotal technical support. While gold benefited more directly from safe-haven flows tied to renewed Middle East tensions, silver’s dual role as both an industrial and precious metal left it more vulnerable to short-term selling.

Despite recent weakness, silver remains structurally bullish. The metal defended the $35.40 breakout zone, and its positioning above the 52-week moving average at $31.29 reinforces longer-term strength. Until silver clears $36.89 with conviction, price action is likely to consolidate within a $35.40–$36.89 range, with any dips toward the lower end likely attracting strategic buying.

Fed Policy and Inflation Signals Driving Expectations

Last week’s softer U.S. CPI print—headline at just 0.1% and core CPI cooling to 2.8%—provided tailwinds by pushing Treasury yields and the dollar lower. This inflation data shifted expectations toward a more accommodative Federal Reserve later in the year. However, the upcoming June 18 FOMC decision and dot plot will determine whether those dovish hopes gain traction.

Futures markets now price in a 99.7% probability that the Fed holds rates steady at 4.25%-4.5%, but Powell’s press conference and the new projections could alter timing expectations for potential cuts. Any surprise tilt toward easing could boost silver above the $36.89 barrier.

Industrial Demand Adds Long-Term Support—U.S.-China Trade Progress Key

Silver’s industrial use case continues to support the metal fundamentally. Its role in solar technology and electronics remains robust, with trade headlines also carrying weight. Progress in U.S.-China negotiations, particularly a framework allowing rare earth exports in exchange for tech easing, may limit silver’s safe-haven appeal short-term but enhances its industrial demand profile—especially if supply chains normalize.

Near-Term Outlook: Consolidation with Upside Bias

Silver is likely to trade in a $35.40–$37.50 range this week, with price bias leaning higher if the Fed reinforces the idea of cuts later this year. A clean break above $36.89 would open the door to $37.50–$38.00. Conversely, a break below $35.40 would shift the near-term tone neutral, but buyers are expected to reemerge near $34.87.

The backdrop of easing inflation, stable Fed policy, and firm industrial demand continues to favor silver bulls on any pullbacks.