Silver (XAG) Forecast: Silver Market Crushed by Yields Spike and Dollar Surge

Spot Silver Sinks as Treasury Yields and Dollar Jump

Spot Silver (XAGUSD) is trading at $76.45, down $7.07 or 8.46% at 16:45 GMT Friday. That is one of the biggest single session drops in years. The U.S. Dollar Index is surging. The 30-year Treasury yield cleared 5.1%. The 10-Year U.S. Treasury yield hit 4.573%. Three consecutive hot inflation prints this week forced a complete repricing of the Fed outlook and silver is absorbing the full weight of that repricing in one session.

Technical Outlook

Spot Silver (XAGUSD) is under heavy pressure Friday, but not necessarily in a weak position according to the daily charts. The selling started late Thursday, but the acceleration began early Friday when sellers drove it under the long-term 50% level at $83.61. The break was hard and fast because there was no support between the 50% level and the 50-day moving average at $76.99.

At the mid-session, the market is trading at $76.35, putting it below the 50-day MA, which could become new resistance.

The next downside targets are a support zone at $75.19 to $71.84 and the long-term 61.8% level at $74.63. The support zone was formed by the March 23 main bottom at $61.00 and the May 13 main top at $89.38.

Buyers could return on a test of $75.19 to $71.84 because they can lean on the main bottom from April 29 at $70.86 for support. These are the last potential support levels before the 200-day moving average at $64.86, our long-term trend indicator.

Three Inflation Prints Broke the Rate Cut Story

Tuesday was CPI at 3.8% annually, the highest reading since May 2023. Wednesday was PPI running at 6% year-over-year, the strongest since late 2022. Thursday was import prices jumping 1.9% with fuel costs posting the biggest monthly increase in four years. Each one came in above expectations and each one pushed the rate cut timeline further out. By Friday the market had stopped looking for cuts entirely. Some traders are now pricing in another hike. That sequence is the most bearish possible environment for a non-yielding asset like Spot Silver (XAGUSD) and the price is reflecting it.

Silver hit $89.38 earlier this week. That move was built on one assumption. The Fed was going to ease eventually and patient money could wait it out. Three inflation prints killed that assumption in 72 hours. The money that was waiting is not waiting anymore and silver is first in line to give back because there is nothing to hold onto on the way out. No yield, no dividend, no offset. Just the exit.

Warsh Inherits a Difficult Picture

New Federal Reserve Chair Kevin Warsh is stepping into an environment where inflation is running above target, oil is above $100 and the bond market is signaling that aggressive easing is not coming. Trump has pushed for lower rates but the data is not cooperating. The 30-year yield above 5.1% and the 10-Year above 4.5% are the bond market’s answer to that pressure. Until the inflation picture changes the new Fed chair has no room to move and Spot Silver (XAGUSD) has no rate tailwind to lean on.

The Dollar and Yields Are Working Together

The U.S. Dollar Index surge Friday is the visible driver but yields are the engine underneath it. The 30-year U.S. Treasury yield above 5.1% means investors can sit in government bonds and collect more than 5% annually with virtually no credit risk.

The 10-Year U.S. Treasury yield at 4.573% makes the same argument on the shorter end. Silver pays nothing. When the alternative offers those kinds of returns the argument for holding a non-yielding metal disappears fast and the selling that follows is not gradual.

Silver gets hit harder than gold in this environment because it sits between the precious metals market and the industrial economy. When both the rate trade and the growth trade turn negative at the same time silver takes the double hit. Gold has a deeper safe-haven bid that partially offsets the rate pressure. Silver does not have that cushion in the same way and Friday showed it.

Oil Is Adding to the Inflation Problem

June WTI crude oil pushed above $104 a barrel Friday. Spot Brent crude moved near $108. Trump said his patience with Tehran is running out after the Beijing meetings and the oil market repriced that immediately. Higher oil feeds transportation costs, production costs and consumer prices before the month is out. Three hot inflation prints this week were all driven in part by energy costs and oil moving higher going into the weekend means the inflation picture does not improve on its own next week. The Fed stays pinned and silver stays under pressure for the same reason it has been under pressure all week.

What I’m Watching

The dollar clearing multi-year highs and the 30-year yield above 5.1% are the two fundamental drivers sitting on top of those chart levels. Until oil drops and takes inflation pressure down with it the rate chain stays intact and the path of least resistance for Spot Silver (XAGUSD) stays lower.

The 50-day moving average at $76.99 just broke and is now potential resistance. The support zone at $75.19 to $71.84 is the next area where buyers could step in. Lose that and the 200-day moving average at $64.86 becomes the conversation.

More Information in our Economic Calendar.