Silver (XAG) Forecast: Silver retreats from 13-year highs as profit-taking emerges

Silver Tests Key Resistance at $36.89 as US CPI Data Looms

Silver pulled back 0.2% to $36.64 per ounce Tuesday, trading near its highest levels in over 13 years as profit-taking emerges after the recent rally. The white metal is testing critical resistance at $36.89, with bears eyeing a potential reversal if selling pressure builds beyond the $35.91 support level.

At 12:44 GMT, XAG/USD is trading $36.65, down $0.11 or -0.30%.

Will US CPI Data Trigger Silver Selloff?

Wednesday’s Consumer Price Index report looms large for precious metals, with markets pricing roughly 50 basis points of Fed cuts by year-end. Gold’s technical picture offers key insights for silver traders, as XAU/USD defends crucial support above $3,310.48 while the dollar index holds steady below 99.00. A hotter-than-expected inflation print could pressure both metals, while softer data would reinforce their appeal as hedges against monetary easing.

Silver’s correlation with gold remains strong, particularly during risk-off periods. Gold’s 50-day moving average at $3,269.90 has provided reliable support for months, suggesting similar technical levels may emerge for silver if profit-taking accelerates.

Can US-China Trade Talks Break Precious Metals Momentum?

Extended trade negotiations in London between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are addressing complex issues beyond tariffs, including chip export controls and rare earth access. Unlike previous tariff-focused meetings, these talks could produce meaningful progress that tempers safe-haven demand across precious metals.

Treasury yields slipped Monday as the 10-year dropped 2.6 basis points to 4.482%, while the 2-year fell nearly 4 basis points to 4.005%. Any breakthrough in trade relations could reduce geopolitical risk premiums embedded in silver and gold prices.

Global Rate Divergence Supports Silver Bulls Despite Profit-Taking

Rate expectations are diverging globally, with the Bank of England facing pressure to cut sooner due to weakening UK labor data, while the Bank of Japan delays further hikes. This mixed central bank outlook, combined with lingering trade uncertainty, keeps risk appetite subdued and supports underlying precious metals demand.

Silver’s technical setup mirrors gold’s broader strength. While the white metal faces immediate resistance at psychological levels of $37.00, $38.00, and the major $40.00 round number, downside support emerges at former tops of $35.40 and $34.87.

Market Forecast: Silver Consolidation Before Next Leg Higher

Silver appears poised for near-term consolidation as traders book profits from the 13-year high run. The key test comes at $35.91 support – a break below this level would signal deeper pullback potential toward $35.40-$34.87.

However, gold’s technical resilience above its 50-day moving average suggests the broader precious metals uptrend remains intact. With Fed policy uncertainty, ongoing geopolitical tensions, and global rate divergence providing fundamental support, silver’s correction likely represents a healthy pause rather than trend reversal. Bulls should watch for renewed buying interest on any test of the $35.40 support zone.

More Information in our Economic Calendar.