Silver (XAG) Forecast: Inflation Cools, But No Fed Cut Means Silver Rally Could Stall

CPI Miss and Lower Yields Pressure Silver Prices

Silver pulled back slightly on Wednesday following the release of softer-than-expected U.S. inflation data, which drove Treasury yields lower and weighed on the U.S. Dollar. Although gold advanced on the news, silver lagged behind, unable to maintain its recent bullish momentum.

The consumer price index rose just 0.1% in May, below the 0.2% forecast. Year-over-year, CPI held at 2.4%. More importantly for markets, core CPI—excluding food and energy—also rose just 0.1% month-over-month, compared to a 0.3% estimate. On a 12-month basis, core CPI cooled to 2.8%, below the 2.9% expectation. The data prompted a risk-off response in the dollar and Treasury market.

Treasury Market Reaction Supports Precious Metals

Bond yields fell sharply after the inflation release, supporting the broader precious metals complex. The 10-year Treasury yield dropped 4 basis points to 4.432%, while the 2-year fell over 6 basis points to 3.949%. The 30-year yield eased to 4.913%. Falling yields reduce the opportunity cost of holding non-interest-bearing assets like silver and gold, typically lending support to metals prices.

Gold responded positively, as traders priced in a potentially less aggressive Federal Reserve. Silver, while initially supported, edged lower and appears to be consolidating near key technical levels.

U.S.-China Trade Framework Adds Crosswinds

Sentiment was also influenced by renewed developments on the U.S.-China trade front. Officials from both countries reached a tentative framework that includes China allowing rare earth exports and the U.S. easing restrictions on tech goods. Commerce Secretary Howard Lutnick indicated the agreement now awaits President Trump’s approval.

The trade progress added modest downside pressure on the dollar and provided another tailwind for metals, though silver’s response remained muted compared to gold.

Key Technical Levels in Focus for Silver

Technically, silver remains in a holding pattern. A trade through $36.89 will signal a resumption of the broader uptrend, with $37.00 as the immediate upside target. On the downside, former tops at $35.40 and $34.87 serve as near-term support zones. The market appears to be waiting for further confirmation from either macro data or Federal Reserve commentary.

Outlook: Silver Consolidates, But Upside Setup Remains Intact

Silver’s pullback looks corrective rather than trend-breaking. With real yields easing, the dollar under pressure, and risk appetite subdued, silver remains positioned for further upside if it can clear $36.89. Until then, traders should watch support at $35.40 closely. The inflation miss and softening yields reinforce a bullish bias in the near term, but gold is currently showing stronger leadership in the precious metals space.

More Information in our Economic Calendar.