Silver (XAG) Forecast: Fed Doubts Stall Silver Rally Below $39.06 — PCE to Set Direction

Silver Holds Steady Below Highs as Dollar and Fed Outlook Cap Momentum

Silver prices are pulling back slightly early Monday, trading just under Friday’s peak at $39.06. After a strong rally last week, the metal is consolidating as traders weigh rising U.S. yields, a firm dollar, and the Federal Reserve’s mixed messaging ahead of key inflation data later this week.

With gold stabilizing above its 50-day moving average and silver eyeing its 14-year highs, traders are staying cautious, awaiting a stronger signal.

At 12:16 GMT, XAG/USD is trading $38.75, down $0.11 or -0.29%.

Fed Caution Keeps Markets in Check as PCE Looms

The dollar index is up around 0.2% and U.S. Treasury yields are climbing, with the 10-year near 4.28% and the 2-year approaching 3.72%. This uptick is weighing on precious metals broadly, as stronger yields increase the opportunity cost of holding non-yielding assets like silver.

Fed Chair Jerome Powell’s remarks from Jackson Hole were balanced — noting persistent inflation but also signs of labor market softening. The tone lacked a clear signal, but didn’t encourage aggressive rate cuts either.

The market’s next catalyst comes Friday, with the release of the Fed’s preferred inflation gauge — the core PCE price index. Consensus estimates point to a year-over-year rise of 2.9%, up from 2.8% in June. A hotter print could reinforce the Fed’s higher-for-longer stance, boosting the dollar and potentially stalling silver’s advance. On the other hand, softer inflation would open the door to renewed rate-cut bets — a tailwind for metals.

Silver Technicals Stay Constructive, But Momentum Pauses

Technically, silver remains in bullish territory. Last week’s surge brought prices within striking distance of the July 23 high at $39.53. A clean breakout above that level would expose the next major resistance at $44.00.

However, the 50-day moving average at $37.50 and a nearby pivot at $37.40 provide firm support for now. Deeper pullbacks could test $36.96 and $36.21 — levels that may attract value buyers if broader sentiment remains intact.

Short-Term Outlook: Direction Hinges on Inflation Print

Silver’s short-term outlook remains constructive but data-dependent. As long as the metal holds above the $37.50–$37.40 zone, bulls remain in control.

However, with the dollar strengthening and yields firming, any disappointment in Friday’s PCE data could trigger a downside test. Traders should watch for a breakout above $39.53 to confirm upside momentum or a dip toward support for potential entries.

Until then, expect consolidation and a tug-of-war between rate expectations and inflation trends.

More Information in our Economic Calendar.