Silver (XAG) Forecast: Pivotal Resistance at $37.87 in Focus After PMI-Driven Rebound

PMI Miss Sparks Rate Cut Bets, Lifts Precious Metals

Silver prices edged higher Tuesday as traders reacted to the weaker-than-expected U.S. ISM Services PMI, which signaled sluggish momentum in the U.S. economy. The ISM Services index registered 50.1 in July, barely holding above the 50-point expansion threshold and down from June’s 50.8. The soft print increased bets that the Federal Reserve may ease policy sooner than previously expected, providing a tailwind for non-yielding assets like silver.

At 14:48 GMT, XAG/USD is trading $37.78, up $0.37 or +0.99%.

Adding pressure to the dollar and bolstering silver’s appeal, the report showed notable softness in the labor market. The Services Employment Index dropped to 46.4, the fourth contraction in five months.

New orders also lost ground at 50.3, while the Business Activity Index slipped to 52.6 from 54.2 in June. The overall tone reinforced expectations of decelerating services activity, despite ongoing supply bottlenecks.

Prices, Tariffs and Delivery Delays: Underlying Inflation Risk Persists

While broader service activity slowed, inflation signals intensified. The Prices Index rose sharply to 69.9, the highest since October 2022, highlighting persistent input cost pressures. Supplier Deliveries also slowed, with that index climbing to 51, suggesting logistics constraints remain a factor. Several respondents cited tariff-related concerns, especially around imported feed ingredients, trace minerals, and equipment purchases.

Industries such as Accommodation & Food Services, Construction, and Mining reported contractions, pointing to growing stress in interest-rate and trade-sensitive sectors. Meanwhile, tariff uncertainty was widely mentioned as a reason for delayed planning, canceled public projects, and inflated costs. However, Transportation & Warehousing and Retail Trade remained relatively resilient.

Technical Setup: Silver Eyes Breakout If $37.87 Pivot Clears

Technically, silver is testing a key pivot level at $37.87 — the 50% retracement of its short-term range from $39.53 to $36.21. This area not only acts as resistance but could serve as a breakout trigger if cleared decisively. Support is holding firm at the 50-day moving average of $36.70, with a swing bottom at $36.21 offering additional downside protection.

Outlook: Dollar Weakness and Fed Policy Hinge on Further Data

With softening services data and continued employment weakness, traders are increasingly pricing in a more dovish Fed.

If follow-up data aligns with today’s tone, silver may see accelerated gains above the $37.87 level, with potential to retest the recent $39.53 high.

However, persistent inflation via tariffs and input costs may keep rate cut expectations in check, limiting the upside unless broader economic indicators deteriorate further.

For now, silver remains in a constructive technical position, supported by weakening economic signals and strong underlying price levels.

More Information in our Economic Calendar.