Silver (XAG) Forecast: Overheated Silver Market Faces Pullback After Multi-Year High

Silver Pulls Back From Multi-Year High as Market Eyes Potential Reversal

Spot silver (XAG/USD) eased early Friday after touching a multi-year high of $54.49, with price action pointing toward a potential bearish reversal. While the uptrend remains intact for now, the session’s pullback raised red flags for traders watching for confirmation of a near-term top.

At 13:48 GMT, XAG/USD is trading $52.74, down $1.50 or -2.76%.

A close below the session open would validate a bearish closing price reversal top, opening the door to a correction. The next key downside marker is $50.91, with technical analysts cautioning that further downside remains likely if sentiment continues to sour. That said, any move back through $54.49 would immediately invalidate the bearish setup and put silver back on a bullish footing.

From a positioning standpoint, silver remains well above its 50-day moving average — a traditionally bullish signal — but the distance from the average suggests the rally has become overheated. Markets often correct when prices extend too far, too fast, particularly when technical overbought conditions align with profit-taking risk.

Fed Pivot Hopes Still Supporting Metals

Silver’s broader gains this month have been fueled in part by expectations of a Federal Reserve pivot. Increasingly dovish rhetoric from Fed officials, including Governor Waller and former advisor Stephen Miran, is building momentum for rate cuts at the upcoming FOMC meeting. Miran has gone as far as advocating deeper cuts than some colleagues support, citing both labor softness and signs of credit stress.

Weakness across U.S. regional banks is adding urgency. Zions Bancorporation disclosed a $50 million loss tied to commercial lending, while Western Alliance flagged fraud-related write-downs. This deterioration in financial stability has driven a rotation into precious metals, particularly those viewed as alternatives to fiat exposure.

Geopolitics May Cap Upside for Now

One emerging headwind for silver may be renewed tensions between the U.S. and China. While not yet a dominant market driver, traders are watching for escalation that could weigh on industrial metals demand and curb speculative enthusiasm. Silver, which carries both monetary and industrial value, is particularly sensitive to shifts in global trade sentiment.

Short-Term Outlook: Correction Risk Rising

Unless silver can quickly reclaim $54.49, the bias is shifting toward neutral-to-bearish. The metal’s sharp rise has left it vulnerable to profit-taking and a healthy pullback, particularly if rate cut expectations stall or geopolitical tensions flare. A move down to $50.91 would mark the first meaningful test of the bull market’s resilience.

More Information in our Economic Calendar.