Silver (XAG) Forecast: Dollar Dump Sends Silver Surging Despite Higher Yields

Silver Ripped $2.16 on a Falling Dollar Wednesday

Spot silver is sharply higher late in the session on Wednesday. Long-dated Treasury yields popped as much as five basis points. Treasury Secretary Bessent provided the catalyst for the move by launching a $6 billion bond buyback. The dollar index kept sliding anyway. The Fed under Warsh is still talking tough on inflation with rate-hike odds for next week near 60%. Silver looked at all of it and bought the dollar trade.

At 13:54 GMT, Spot Silver (XAGUSD) is trading $67.91, up $2.16 or 3.29%.

The Dollar Is Doing All the Work

The dollar index kept sliding Wednesday even with yields jumping. That is the trade silver is on. A weaker dollar makes every ounce cheaper for overseas buyers. They showed up Wednesday and did not wait for confirmation from the bond market.

Bessent’s comments about knowing what Japan will do only added to the pressure on the currency. The yen has been strong. Treasury bought yen to reduce the risk of Japanese holders liquidating their $1.1 trillion in U.S. debt. Japan is the largest foreign holder. Bessent is managing the currency side and the bond side at the same time and the dollar is still leaking.

The Fed under Warsh has been talking tough on inflation. Rate-hike odds for next week are near 60%. On paper that should be bearish for the metal. On the screen it was not. Silver traders watched the dollar fall and bought the dip. The yield spike did not register.

Bessent’s Buyback Added Volatility Without Killing the Bid

Bessent launched the $6 billion buyback of longer-dated Treasuries Wednesday. Long-dated yields jumped as much as five basis points before easing back. The bond market was messy. One minute selling, the next catching a bid. That kind of chop usually knocks metals around.

Silver kept climbing through it. The Treasury buying its own bonds to keep the long end from running with federal debt above $40 trillion is not a sign of a calm market. It is the backdrop that has been building under silver and gold all year.

Physical and Industrial Demand Have Not Gone Anywhere

The rally is not just a dollar trade. Physical demand is still there. Industrial users still need the metal. Investors rotating out of paper and into hard assets have not stopped. None of that changed Wednesday morning. The dollar getting cheaper and Bessent reminding everyone that the government is now an active participant in its own debt market gave buyers who were already positioned a reason to add.

Yields Rose and the Dollar Fell at the Same Time

Rising yields and a falling dollar on the same session is unusual. Most days one of them wins the silver trade. Wednesday the dollar won. The yen is too strong. Bessent is too active. The currency side carried more weight than the rate side and silver’s $2.16 move reflected that.

Warsh at the Fed wants to look serious on inflation. Bessent at Treasury wants the bond market to behave. Silver does not need those two goals to line up. It just needs the dollar to keep going the wrong direction.

Daily Spot Silver (XAGUSD) Technical Analysis

Spot silver is trading sharply higher late in the session on Wednesday. The main trend is up according to the daily swing chart. Today’s price action has created a new main bottom at $63.31 to go along with the August 19 main bottom at $62.56. A trade through the last main top at $71.18 will signal a resumption of the uptrend.

The short-term range is $71.18 to $63.31. The market is currently testing its retracement zone at $67.25 to $68.17. Trader reaction to this area will determine the near-term direction. A sustained move over $68.17 will indicate the presence of buyers. This could create the momentum needed for a test of the swing top at $71.18.

A sustained move under $67.25 will signal the presence of sellers. If this move gains traction, a new lower top could form and the market could test $63.31 to $62.56.

The 50-day moving average is providing support at $62.46. The 200-day moving average is resistance at $72.93.

What to Watch

The dollar trade is running the silver market right now. As long as the yen stays strong and the dollar index keeps leaking, silver has a bid regardless of what yields do in the short run. Bessent is buying bonds and managing currencies at the same time. The Fed meets next week with rate-hike odds at 60%. PPI Thursday and CPI Friday are the last inflation reads before September 16. The data decides whether the dollar weakness has room to extend or whether yields take over and the currency side of the trade fades.

The near-term bias is bullish with the main trend up and a new main bottom at $63.31 confirming the structure. The retracement zone at $67.25 to $68.17 is the near-term battleground. A sustained move over $68.17 builds the momentum for a run at the swing top at $71.18. Taking out $71.18 reaffirms the uptrend and puts the 200-day moving average at $72.93 in play. The trend stays up while $63.31 holds. A failure of that level changes the main trend to down and takes the bullish call off the table. Wednesday’s $2.16 move was conviction. The question is whether the dollar keeps cooperating.

More Information in our Economic Calendar.