Silver (XAG) Forecast: Dollar Above 100 Leaves $60.83 in the Crosshairs

The Dollar Took Silver Apart Last Week

Spot Silver settled at $64.88, down $3.16 or 4.64% for the week, after trading between $71.56 and $63.29. The Dollar Index gained 0.96% to 100.760 and the 2-year Treasury yield climbed 2.25% to 4.179%. Silver traders already know what that combination does. The metal got hit from both sides and Friday’s close sets up early weakness heading into Monday.

The DXY bounced off 99.384 early in the week and never looked back. Silver moved in the opposite direction the entire time, which tells you everything about what is driving this market right now.

Dollar Above 100 and Silver Has No Answer

The DXY reclaiming the 100 level is the whole problem for silver right now. Every overseas buyer is paying more for the same ounce and the pullback in physical demand was immediate last week. When the dollar runs nearly a full percent in five sessions, buyers outside the United States do not step in. They wait for the currency to settle before placing new orders and that waiting game strips the bid out from under the price.

Speculative traders were already reducing exposure going into the week and with no physical buying to absorb the selling, silver fell almost five percent without meeting any resistance on the way down. The selling fed on itself while the dollar kept pushing higher at the same time.

The Fed’s policy stance is keeping this trade alive. U.S. rates are attractive relative to every other developed economy and capital is flowing into Treasuries and dollar assets. The yield advantage keeps growing and silver cannot compete with it. The U.S. is offering the best return in the developed world and money goes where it gets paid. That flow into dollar assets is not stopping anytime soon and every dollar that goes into Treasuries is a dollar that is not going into silver.

Physical Buyers Sat This One Out

India went quiet. China went quiet. European fabricators pulled back orders. The dollar’s move was too fast for any of the major importing regions to absorb and when those buyers step away at the same time, silver has no floor. The price dropped almost five percent and never found a bid on the way down because nobody outside the United States was willing to pay up in a currency that was moving against them every session.

Dealers that normally show up on a dip this steep were not interested. Speculative selling ran straight through the market with nothing underneath it. That does not reverse until the DXY settles down and physical buyers get comfortable with the exchange rate again. Right now they are watching, not buying.

Industrial Demand Is Real but Not Trading

Solar, AI infrastructure, EVs, grid buildouts, advanced electronics. The industrial consumption story has not changed and the supply constraints are not going anywhere. None of it mattered last week. The dollar and yields owned the tape and industrial buyers were not going to fight the currency to place orders on a Friday with the DXY at a weekly high.

The way I see it, the long-term setup is still constructive. But constructive does not mean the bottom is in. The dip-buying case keeps leaning on industrial demand and industrial demand did not stop the selling. It will not stop the next wave either if the dollar keeps climbing above 100.

Daily Spot Silver (XAGUSD) Technical Analysis

The main trend is down according to the daily swing chart and the moving averages. A new main top has formed at $71.56 after a rally from $61.50, indicating that traders are still selling rallies. Inside this range is a retracement zone at $66.53 to $65.34. The close under this area suggests early weakness on Monday. Trader reaction to this zone should set the tone.

The downside targets are clustered at $61.50, $61.00 and $60.83. The latter is 50% of the all time high. A trade through a key long-term bottom at $59.34 could trigger an acceleration to the downside.

Overcoming the minor 50% level at $66.53 will indicate the presence of buyers. The first upside target is the 200-day moving average at $68.96. Recovering this indicator and forming a support base will be a sign of strength. If this move creates enough upside momentum, the rally could eventually continue into the 50-day moving average at $74.89. This is the most important resistance level on the daily chart. It’s also the trigger point for an acceleration to the upside.

What to Watch

The dollar above 100 and climbing Treasury yields are the two forces that took silver apart last week and neither one has a reason to reverse before the next round of economic data. As long as the Fed’s rate stance keeps the yield advantage in U.S. assets, physical buyers across India, China, and Europe are going to stay on the sideline waiting for better currency conditions. The industrial demand story is not going to override the dollar trade until the DXY gives back the 100 level.

Silver closed under the retracement zone and that points to early weakness Monday. If sellers stay in control, the downside targets cluster around $61 with the key long-term bottom at $59.34 acting as the trigger for a faster move lower. If buyers reclaim the zone, the 200-day at $68.96 is the first test of whether the decline has run its course.

More Information in our Economic Calendar.