Silver (XAG) Forecast: Sideways Action Continues While Gold Steals the Spotlight

Silver Struggles for Traction as Gold Surges on Fed Cut Bets

Silver prices pulled back early Tuesday, underperforming sharply against gold, which surged to fresh record highs above $3,650. While both metals are traditionally linked, their diverging paths this week reflect contrasting investor sentiment and fundamentals.

Silver’s lag is magnified by a widening gold/silver ratio, which broke above its 50-day moving average at 88.20 and appears headed for the 200-day average at 91.689—a move that could further weigh on silver’s relative performance.

At 13:36 GMT, XAG/USD is trading $41.22, down $0.13 or -0.31%.

Fed Rate Cut Hopes Fuel Gold, Leave Silver Behind

The gold rally is being driven by strong expectations of a Federal Reserve rate cut at the upcoming policy meeting. Fed funds futures are pricing in an 88% chance of a 25-basis-point reduction, and a 12% chance of a more aggressive half-point cut. With U.S. payroll data showing signs of cooling, and potential revisions that could strip 800,000 jobs from previous totals, the case for monetary easing is growing.

This dovish setup has pushed the U.S. Dollar Index down to 97.25—its lowest in seven weeks—while 10-year Treasury yields hover near five-month lows around 4.06%. The resulting weakness in the dollar and real yields has supercharged gold demand, especially from central banks and overseas buyers. Silver, on the other hand, remains tethered to its dual role as both a monetary and industrial metal, the latter of which is weighing on its price.

Industrial Demand Concerns Weigh on Silver

Unlike gold, silver’s partial reliance on industrial demand may be hindering its upside. Fears of a global recession or manufacturing slowdown are leading investors to rotate into gold as a purer monetary hedge. Some analysts speculate that central banks favor gold for strategic reserve accumulation due to its higher value-to-volume ratio, making it more practical to store in size.

Technical Picture: Key Levels in Focus

Silver is currently consolidating, with minor resistance at $41.67. A close above that level would resume the uptrend toward the long-term target at $44.22. On the downside, the first line of support is at $40.40, with additional support at $39.88. Until bulls reclaim higher ground, the risk remains skewed to the downside.

Meanwhile, the gold/silver ratio’s advance suggests further divergence could occur. A move toward the 200-day average of 91.689 would reinforce gold’s leadership and imply continued underperformance for silver.

Outlook: Rangebound with Bearish Tilt Unless Gold/Silver Ratio Reverses

Silver remains rangebound but vulnerable. Unless it can break above $41.67 soon, bearish momentum could build, particularly if gold continues to outpace. Watch the gold/silver ratio closely—its current breakout favors gold, and silver may continue to lag until industrial sentiment improves or gold pauses.

More Information in our Economic Calendar.