Silver (XAG) Forecast: Industrial Demand Concerns Cloud Silver Outlook as Gold Advances

Silver Lags Despite Gold’s Recovery

Silver (XAG/USD) settled at $37.02 last week, falling $1.14 or 2.99%, in sharp contrast to gold’s 0.77% weekly gain. While gold rallied on softer U.S. jobs data that revived rate-cut hopes, silver failed to benefit. This divergence signals a market increasingly focused on silver’s industrial demand outlook—particularly vulnerable under current trade conditions.

Industrial Demand Concerns Center on China

Silver’s underperformance reflects growing concerns around global industrial demand. Newly announced U.S. tariffs—15% on South Korean goods and 50% on Brazilian imports—are adding pressure to manufacturing supply chains. But China remains the focal point. Weak factory activity and disappointing PMI data out of Beijing are raising red flags for silver traders, given China’s major role in global industrial consumption of the metal.

Gold-Silver Correlation Weakens

Although silver typically tracks gold during major monetary events, its recent decoupling underscores the weight of economic softness. Gold rebounded strongly on Friday, driven by a disappointing nonfarm payrolls report and a 1.2% drop in the U.S. Dollar Index.

Silver, however, remained rangebound, lacking the safe-haven appeal that helped lift bullion. Elevated Treasury yields and trade risks continue to cap any upside.

Fed Caution Keeps Market in Limbo

The Federal Reserve left interest rates unchanged at 4.25%–4.50% and offered no forward guidance, reinforcing a data-dependent stance. While the weak jobs report prompted a dovish repricing in rate futures, markets remain uncertain ahead of Tuesday’s U.S. CPI report. Unless inflation surprises to the upside, expectations for a September cut remain in play, which could support metals broadly—though silver may still lag if industrial sentiment doesn’t improve.

Outlook: Watch $36.50 Support, $38.51 Resistance

Silver remains technically vulnerable below $36.21. A sustained break lower exposes $35.28. On the upside, bulls must reclaim $38.34 to regain control. Long-term support is the 52-week moving average at $32.34, which means “buy the dip” is still a valid strategy.

Until tariff tensions subside or Chinese economic indicators show improvement, silver is likely to remain defensive. The CPI report and further trade headlines will be key for near-term direction.

More Information in our Economic Calendar.