Silver (XAG) Forecast: Fed Uncertainty and Tariff Risks Fuel Silver Rally Prospects

Silver Gains Ground as Dollar Weakness and Fed Uncertainty Support Precious Metals

Silver prices edged higher Wednesday, recovering from a two-day sell-off as traders positioned for a potential breakout from current technical levels. The white metal is finding support from the same fundamental drivers boosting gold: a retreating U.S. dollar and easing Treasury yields that reduce the opportunity cost of holding non-yielding precious metals.

At 12:04 GMT, XAG/USD is trading $38.00, up $0.29 or +0.77%.

Can Silver Break Through the 14-Year High at $39.13?

Silver is testing critical resistance levels, with the short-term range established between $36.16 and $39.13. The metal’s recovery found support just above the mid-point at $37.64, with selling pressure halting at $37.59 on Tuesday. A decisive break above $39.13 would signal resumption of the uptrend and target the next major resistance zone.

The 50-day moving average at $35.20 provides major support, mirroring gold’s technical setup where the 50-day at $3323.30 continues to underpin prices. This parallel structure suggests precious metals are moving in tandem, responding to shared macro drivers.

Federal Reserve Rate Expectations Shift After Inflation Data

June’s Consumer Price Index rose the most in five months, with tariff-related inflation lifting core goods costs. Markets have scaled back Fed easing expectations to 44 basis points by December, down from over 50 bps earlier this week. Dallas Fed President Lorie Logan emphasized patience on rate cuts, suggesting the central bank may remain on hold to assess inflation risks.

The retreat in rate cut expectations is tempering precious metals’ upside momentum. However, continued disinflation in services could pave the way for a September cut, providing a tailwind for both silver and gold. The 10-year Treasury yield pulled back from Tuesday’s peak of 4.491% to 4.447%, reducing competition for non-yielding assets.

Trade Tariffs and Geopolitical Risk Support Safe-Haven Demand

President Trump’s threat to impose 30% tariffs on imports from Mexico and the EU beginning August 1 has added uncertainty to markets. While Trump expressed openness to further negotiations and announced a trade deal with Indonesia that reduced proposed tariffs to 19% from 32%, policy volatility remains a concern for traders.

These geopolitical tensions continue to support safe-haven demand for precious metals, with global investors wary of economic fallout from trade disputes. Silver, sharing gold’s safe-haven characteristics while also benefiting from industrial demand, remains well-positioned in this environment.

Silver Outlook: Bullish Bias Intact Despite Near-Term Consolidation

Silver appears poised for a breakout attempt as price compression builds between current support and resistance levels. The metal’s correlation with gold fundamentals suggests similar drivers will influence direction: Fed policy uncertainty, dollar weakness, and tariff-related safe-haven flows.

Unless strong catalysts emerge, silver is likely to consolidate within the current band. However, a sustained break above $39.13 could open the door toward higher targets, while a failure to hold above $37.64 would test the 50-day moving average support at $35.20. The bullish bias remains intact, but sustained upside depends on rate guidance and inflation data confirming broader precious metals momentum.

More Information in our Economic Calendar.