Silver (XAG) Forecast: Silver Outlook Dims if Rate Cut Hopes Continue to Fade

Silver Takes a Hit but Holds Above the Intraday Low

Spot Silver is down sharply late in the session on Tuesday, but off its intraday low. Several factors are contributing to today’s weakness including both technical and fundamental influences.

Swing Chart Analysis: The Trend Is Mixed

Technically, the trend is mixed or neutral. Let’s look at the swing chart first. The swing chart posted a higher-high on Monday at $96.43 after following through to the upside, following Friday’s breakout over $92.20. The bottoms at $71.98 and $64.06 are support. Taking out $96.43 will signal a resumption of the uptrend.

The main range is $45.55 to $121.67. Since the January 29 top, the market has spent a considerable amount of time inside its retracement zone at $83.61 to $74.63. Despite some whipsaw action in early February, which drove the market to $64.06, I think the market has, for the most part, respected our formal retracement zone.

The short-term range is $121.67 to $64.06. After a considerable wait, silver finally tested its retracement zone at $92.86 to $99.66. Sellers showed up inside this zone on Monday when the market tested $96.43. This was a potentially bearish closing price reversal top. Our rules say that following a prolonged move up in terms of price and time (7-10 days) and a market closes lower, below its daily mid-point and below the opening, it’s a serious sell signal. After confirmation with a follow-through move over the next 2 to 3 days, we should look for a 50% to 61.8% correction of the last rally.

The last rally was $71.98 to $96.43, so we hit our 50% to 61.8% objective at $80.24 to $76.42 today, when the market plunged to $77.96.

What Comes Next: Coil Pattern in the Making

The reversal top is not a change in the trend, but a chart pattern designed to alleviate some of the upside pressure. It can eventually lead to a change in trend, but it’s going to need a few days of work in order to do that. This could include a few days of straddling retracement levels between $96.43 and $77.96. This could form a coil pattern that often leads to major moves, depending on how long it spends inside the coil.

Besides the swing chart analysis, silver traders should also pay close attention to the 50-day moving average trend indicator at $85.05. When combined with the swing chart, a price cluster with the 50% level at $83.61 emerges.

Based on today’s price action, the near-term tone of the market is likely to be determined by trader reaction to the 50-day moving average at $85.06 and the 50% level at $83.61. Look for buyers to return if traders can recapture the 50-day MA and for selling to possibly intensify on a sustained break under the 50% level.

Fundamental Pressure: Yields, Dollar and a Hawkish Fed

Silver is under pressure because of rising Treasury yields, a stronger dollar and weaker gold. Treasury yields are edging higher because of inflation fears caused by the surge in crude oil and gasoline prices. Investors are worried that high inflation will force the Fed to keep interest rates on hold, or even raise its benchmark if the war between the U.S. and Iran extends for several months. Additional factors that could keep crude oil prices inflated include the closing of the Strait of Hormuz and the destruction of oil production infrastructure in the Middle East.

Rate Cut Hopes Were Silver’s Foundation — Now They’re at Risk

Putting it all together, silver is not a safe-haven asset in the traditional sense like gold. It’s an industrial metal that is highly sensitive to interest rate changes. Most of the rally since early 2025 was based on a number of rate cuts by the Fed. If you take this factor away from silver, prices are likely to collapse. Furthermore, if rising Treasury yields continue to climb and the dollar gets stronger, then look for silver to face even more selling pressure over the near-term.

Right now, the CME’s FedWatch tool is only projecting the Fed to hold rates in March or June. If it turns over to a full-blown rate hike then we could see $50 silver.

More Information in our Economic Calendar.