Silver (XAG) Forecast: Price Drops as Rally Stalls—Profit-Taking Hits Silver Market

Silver Retreats from 14-Year High as CPI Data Fails to Spark Breakout

Silver pulled back at mid-session Tuesday after hitting a 14-year high in the previous session, with the closing price reversal top signaling profit-taking rather than a trend change. The white metal found support at swing bottoms of $36.16 and $35.28, with major support anchored at the 50-day moving average of $35.10. This technical setup reinforces the “buy the dip” strategy for silver bulls.

Gold edged lower alongside its precious metals counterpart as traders digested mixed signals from inflation data and renewed trade tensions. The yellow metal remains range-bound within familiar levels that have held since mid-May, struggling to find a catalyst for the next major move.

Federal Reserve Policy Uncertainty Weighs on Rate Cut Expectations

Tuesday’s Consumer Price Index data matched forecasts but failed to provide the dovish surprise needed to fuel precious metals higher. Headline CPI rose 0.3% month-on-month, pushing the annual pace to 2.7%, while core CPI increased 0.2% monthly, matching the 2.9% yearly estimate. The FedWatch tool shows only a 2.6% chance of a rate cut this month, though September remains in focus with markets pricing 50 basis points of easing by year-end.

Adding to policy uncertainty, the Trump administration confirmed it is reviewing whether President Trump can lawfully remove Fed Chair Jerome Powell. While no immediate action is expected, this threat introduces volatility that could influence future rate pricing and support precious metals’ safe-haven appeal.

Dollar Strength and Treasury Yields Present Headwinds

The U.S. dollar ticked higher, supported by rising Treasury yields and investor positioning near technical resistance. The Dollar Index hit 98.682 intraday, approaching its 50-day simple moving average at 98.80. A close above that level would signal a possible extension toward the June 23 high of 99.421, with price support near 97.899 providing the dollar’s underlying momentum.

Trade War Threats Keep Safe-Haven Bid Intact

President Trump’s renewed threat to impose tariffs of up to 30% on European Union and Mexican imports maintained a floor under precious metals prices. These geopolitical and trade tensions continue supporting gold and silver’s defensive characteristics during periods of global economic stress.

Market Forecast: Technical Support Favors Dip Buyers

Silver’s pullback from 14-year highs appears corrective rather than a trend reversal, with strong technical support levels providing entry opportunities for bullish traders. Independent trader Tai Wong noted that gold “should be perkier… we need a new driver to push gold back up past $3,400,” while strategists like Zaner Metals’ Peter Grant remain bullish on ongoing uncertainty and eventual easing prospects.

Wednesday’s Producer Price Index release and fresh Fed commentary will provide the next catalyst. Should the dollar break above 98.80 and rate cut expectations retreat further, precious metals could face additional downside pressure. Conversely, any dovish surprise or escalation in trade rhetoric may reignite upside potential.

Outlook: Neutral-to-Bullish – Silver’s technical support structure favors dip-buying strategies, while both precious metals remain supported by trade tensions and Federal Reserve easing expectations, despite near-term dollar strength headwinds.

More Information in our Economic Calendar.