Silver (XAG) Forecast: Early Dip on China Trade Sentiment, All Eyes on Fed This Afternoon

Silver Drifts Lower as Gold Weakness, Tepid Demand Weigh on Sentiment

Silver prices slipped on Wednesday, pressured by a confluence of bearish signals including fading gold support, limited investor interest, and technical signs of exhaustion. XAG/USD was last seen hovering just above the 50-day moving average at $32.70, a level now acting as critical short-term support.

At 13:23 GMT, XAG/USD is trading $32.76, down $0.45 or -1.36%.

Gold Pullback Adds Pressure to Silver

Silver is trading in lockstep with gold, which fell over 1% as improved risk sentiment around U.S.-China trade discussions and the Federal Reserve’s rate outlook sapped safe-haven demand. Traders are pricing in a 95.6% chance the Fed holds rates steady, while the likelihood of a rate cut at the next meeting remains low at 30%. Without a firm dovish turn, precious metals are struggling to find upside momentum. Gold’s inability to break out past its recent highs is weighing on silver, dampening bullish enthusiasm across the board.

Fed Decision and Powell’s Tone in Focus

While a hold on rates is widely expected, traders will scrutinize Fed Chair Jerome Powell’s post-decision comments for any shift in tone that could suggest easing later this year. If Powell emphasizes downside risks or acknowledges weakening data, real yields could fall—potentially reigniting interest in both gold and silver. Conversely, any resistance to future cuts would likely reinforce dollar strength and weigh further on non-yielding assets like silver. This makes Wednesday’s Fed commentary a key pivot point for short-term direction.

Technical Picture Signals Fatigue

Tuesday’s high at $33.25 marked the best level since April 29, but it failed to surpass the April 24 peak at $33.70. This emerging pattern of lower highs is raising the risk of a short-term top forming. A break below $32.70 could open the door to deeper losses, with support layered at $32.19 (Fibonacci level), then $31.45 (50% retracement), and finally the 200-day moving average at $31.15. Bulls will need to reclaim $33.70 with conviction to shift momentum back to the upside.

Lack of Investor Appetite

Unlike gold, which still sees sporadic interest from geopolitical and currency market risks, silver is struggling to attract institutional support. ETF demand remains sluggish, and there is no indication of increased central bank buying—factors historically key to sustainable rallies. Physical demand hasn’t filled the gap either, leaving silver exposed to broader weakness in commodities and metals sentiment.

Silver Forecast: Bearish Tilt Unless Fed Shifts Tone

With gold retreating and silver showing signs of exhaustion below recent highs, the short-term forecast for silver leans bearish. A confirmed break below $32.70 would likely draw sellers back into the market, with eyes on the $31.15 level for stronger support. While a dovish surprise from Powell could offer near-term relief, rallies are likely to face resistance unless accompanied by a clear shift in Fed policy tone.

More Information in our Economic Calendar.