Silver (XAG) Forecast: Price Prediction Hinges on Fed’s Inflation Gauge This Week

Silver Extends Weekly Advance as Fed Eases, Focus Shifts to Inflation Data

Silver (XAG/USD) finished the week at $43.09, up 2.13%, marking its fifth consecutive weekly gain. The move follows the Federal Reserve’s 25-basis-point rate cut and continued expectations for additional easing.

Investor flows into the metals complex remain steady, supported by rate repricing, persistent physical demand, and solid industrial use. Price action is now pressing into multi-year resistance at $44.22, with broader positioning tied to key macro data due at the end of the week.

Fed Begins Easing Cycle, But Inflation Keeps Policy in Play

The Fed’s cut was fully priced ahead of last week’s decision. However, Chair Powell offered no forward guidance, citing uncertainty around inflation. The July core PCE index rose 2.9% year-over-year, the highest since February, and remains well above the Fed’s 2.0% target.

The updated Summary of Economic Projections showed inflation expectations remaining elevated through 2026, with core PCE forecast at 3.1% for 2025 and 2.6% in 2026.

This puts additional weight on Friday’s August PCE release. A print in line or above July’s level may limit the Fed’s ability to move again in October. Conversely, a weaker number would validate the current market pricing for another cut and keep the bid in place for silver.

Consumer Sentiment Will Test the Fed’s Confidence Narrative

The final read on the University of Michigan’s September consumer sentiment survey is also scheduled for Friday. The preliminary print showed a 4.8% decline in confidence, with long-run inflation expectations rising to 3.9%. The Fed tracks these numbers closely. A weaker final result could support further easing expectations, while stronger data may challenge the current rate view.

Industrial Demand Supports Market Structure

Outside policy expectations, silver remains supported by stable industrial demand. Key applications in solar panel production, electronics, and semiconductors continue to draw material off the market. Physical demand has also been consistent, supported by rotation out of gold and platinum as investors seek more attractive entry points.

Positioning and Key Levels

Silver is holding well above swing chart support levels at $36.96, $36.21, and $35.28. The 52-week moving average at $33.80 marks the key long-term trend indicator. A break above $44.22 would confirm continuation, with $50.00 being floated as the next medium-term level.

Weekly Outlook

The trend remains bullish into Friday’s data. Market direction will hinge on inflation and sentiment results. A soft PCE keeps silver supported. A stronger print likely triggers near-term selling into support.

More Information in our Economic Calendar.