Silver (XAG) Forecast: Hot PCE Data Pushes Silver Lower, Is More Pain Ahead?

Silver Slips as PCE Data Dampens Rate Cut Hopes

Silver prices fell sharply Friday, dropping below the $36.30 pivot and marking $36.84 as a new minor top. The market is signaling weakness as it moves further from the June 18 high of $37.32, reflecting broader market adjustments following the hotter-than-expected U.S. core PCE data.

At 13:15 GMT, XAG/USD is trading $35.82, down $0.84 or -2.28%.

Fed’s PCE Surprise Fuels Dollar and Yields

The core PCE index, the Federal Reserve’s preferred inflation gauge, rose 2.7% year-over-year in May, above consensus and pushing the Fed further from its 2% target.

Treasury yields inched higher post-release, while the dollar firmed, applying additional pressure on non-yielding assets like silver.

The higher PCE print reduces the likelihood of near-term Fed rate cuts, reinforcing a restrictive stance that traders must account for in positioning.

Personal income fell by 0.4%, while personal consumption expenditures dipped 0.1%, signaling cautious consumer spending and the potential for further disinflation later, but markets are currently pricing in stickier inflation.

Gold’s Drop Below Key Support Adds to Silver’s Pressure

Gold’s break below its 50-day moving average at $3323.80 underscores the loss of safe-haven flows that had been indirectly supporting silver during geopolitical stress.

The Iran-Israel ceasefire and a U.S.-China rare earth deal have eased geopolitical premiums, while firm real yields continue to limit upside for precious metals.

Gold is now down over 2% for the week, and its slide from April’s record highs further pressures sentiment across metals, adding to silver’s weakness as traders unwind overbought positions.

Technical Levels: Watching $35.28 and $34.10

For silver, a break below $35.28 will confirm increased selling pressure, with $34.87 as the next key support. A failure at this level would open the path to test the 50-day moving average at $34.10, which has held upward momentum since May 20. Conversely, reclaiming $36.84 would invalidate the near-term bearish view, potentially setting up a retest of $37.32.

Short-Term Outlook: Bias Tilts Bearish with Event Risks Ahead

With the hotter PCE data reinforcing a higher-for-longer Fed stance and gold slipping under critical support, silver faces continued downside risk if yields and the dollar extend their gains.

Traders should expect volatility around upcoming data prints and Fed commentary, using bounces toward $36.30-$36.84 as potential sell zones while monitoring $35.28 and $34.10 for acceleration signals. A decisive catalyst will be required for silver to reclaim upside momentum in a high-rate environment with fading safe-haven demand.

More Information in our Economic Calendar.