Silver (XAG) Forecast: Silver Rally Accelerates on PCE Data and Fed Policy Hopes

Silver (XAGUSD) Hits Record High as Fed Cut Bets Build

Spot silver (XAGUSD) surged to a record intraday high of $59.34 on Friday before closing higher at $58.36, up $1.22 or 2.13% on the session. The strong close reflected steady demand ahead of next week’s Federal Reserve decision, with traders leaning into expectations for another 25 bp rate cut and continued support for precious metals.

Jobs Data and Layoff Surge Keep Growth Fears Alive

Labor market concerns stayed in focus. ADP reported a 32,000 decline in private payrolls for November, the largest drop in more than two years.

Challenger, Gray & Christmas said announced layoffs have reached 1.17 million in 2025, 54% above the same period last year, with 71,321 cuts in November alone driven by restructuring, artificial intelligence adoption, and tariff pressures.

Those figures reinforced the case for easier policy even as parts of the economy remain resilient.

Cooler PCE, Higher Yields, and the Bonds Relationship

Friday’s core PCE print showed a 0.2% monthly rise and 2.8% annual rate, with headline PCE up 0.3% month-on-month and 2.8% year-on-year, broadly in line with expectations but slightly cooler on the core yearly reading. The data was consistent with another 25 bp cut next week, but did not argue for a faster pace of easing in 2026.

Treasury yields moved higher after the release: the 10-year ended near 4.14%, the 2-year around 3.56%, and the 30-year close to 4.79%, each up a few basis points on the day. As usual, higher yields meant lower prices for Treasuries, since yields and prices move in opposite directions, but the modest move did little to dent appetite for XAGUSD.

Dollar Pressure, Sentiment, and Gold–Silver Divergence

The U.S. dollar index (DXY) closed at 98.986, holding near a one-month low and down 6.67% year-over-year as markets price an 87% probability of a Fed cut and speculate that Kevin Hassett could replace Jerome Powell in 2026.

A weaker dollar kept metals supported. Gold traded near $4,200 and was essentially flat on the day, leaving silver’s 2.13% gain as the standout move and underscoring the metal’s dual safe-haven and industrial appeal.

Industrial Deficits Back “Buy-the-Dip” in XAGUSD

Silver’s 98% year-to-date advance has been driven by persistent supply deficits and strong industrial demand, especially from record 2025 solar installations that have pushed inventories to decade lows.

The metal’s inclusion on the U.S. Department of Interior’s 2025 List of Critical Minerals reinforced its strategic role in electrification. Market strategist Bart Melek summed up positioning, noting that many investors still view silver as cheap relative to gold, with structural deficits supporting accumulation on weakness.

With XAGUSD holding well above support at $56.46 and the 50-day moving average at $50.74, the market continues to favor a buy-the-dip approach.

Short-Term Market Forecast: Bullish Into the Fed

Given Friday’s higher close, record intraday high, supportive rate-cut expectations, and ongoing dollar softness, the short-term outlook for silver remains bullish.

Unless the Federal Reserve surprises with a more hawkish message next week, traders are likely to stay constructive on XAGUSD, using pullbacks as entry points rather than exit signals.

More Information in our Economic Calendar.