Silver (XAG) Forecast: Silver’s Short-Term Direction Hinges Upon Reaction to $37.50 Pivot

Silver Rallies as Dollar Weakness and Fed Rate Cut Bets Drive Precious Metals Higher

Silver prices pushed higher Friday, extending a strong run as Treasury yields edged lower and the U.S. dollar eased. Safe-haven demand remained supported by tariff uncertainty, dovish Federal Reserve commentary, and soft labor market signals, all combining to keep silver on firm technical footing near key resistance levels.

Treasury Yields Drop as Federal Reserve Policy Pivot Builds Momentum

Benchmark 10-year yields slipped to 4.42%, while the 2-year yield dropped to 3.87%, marking a notable decline that confirms easing pressure on the short end of the curve. Lower yields reduce the opportunity cost of holding non-yielding assets like silver, making the white metal more attractive to institutional allocators.

The broader Treasury complex reflected safe-haven flows despite upbeat U.S. housing and retail data suggesting economic stability. Fed Governor Chris Waller struck a notably dovish tone, openly backing a July rate cut and arguing for proactive easing given weakening private-sector labor data.

With fed funds futures now pricing in 45 basis points of easing by year-end, traders are positioning for the Fed to cut rates sooner rather than later, with September emerging as the consensus target for the first move.

Dollar Index Retreat Opens Door for Silver Bulls

The U.S. Dollar Index (DXY) settled at 98.462 on Friday, down 0.16% for the session despite posting a 0.61% weekly gain. The dollar’s pullback followed the yield decline and volatile trading driven by mixed U.S. inflation data, political pressure on Fed Chair Jerome Powell, and escalating trade tensions. While consumer prices edged higher, the producer price index remained flat, creating cross-currents in rate expectations.

Silver’s inverse correlation with the dollar helped drive Friday’s gains, as precious metals traders capitalized on greenback weakness flowing from the bond market’s dovish repricing. The yield-driven dollar selloff reinforced silver’s appeal as a hedge against currency debasement in an environment of shifting monetary policy expectations.

Tariff Tensions Keep Safe-Haven Premium Alive

President Trump’s renewed tariff threats on EU goods—reportedly demanding 15%-20% levies—rekindled market anxiety around trade policy. Ongoing negotiations with Japan and Indonesia remain unresolved, while political pressure on Powell to cut rates adds another layer of risk premium to precious metals positioning.

These developments have strengthened the case for safe-haven exposure across the precious metals complex. Analysts from Marex and Standard Chartered both highlighted silver and gold’s technical resilience, with the latter noting that precious metals’ “floor looks well supported” in the current environment.

Silver Price Forecast: Key Range Levels Define Next Directional Move

Silver (XAG/USD) settled higher on Friday after testing critical technical levels. The short-term range spans $36.16 to $39.13, with its midpoint at $37.64 tested on Wednesday and Thursday. After a 2-day setback, the market rebounded from a test of $37.50.

The minor range runs from $37.50 to $39.13, and the market faced headwinds Friday at its midpoint of $38.32. A trade through $39.13 will signal a resumption of the uptrend, while a sustained move through $37.50 could trigger an acceleration into the 50-day moving average at $35.50.

Given solid technical structure and fundamental tailwinds—soft dollar, falling yields, and tariff risk—silver retains a bullish outlook heading into next week.

Any dovish confirmation from the Fed or further labor market softening could unlock fresh upside momentum in the white metal, particularly given silver’s higher beta to both monetary policy and industrial demand cycles.

More Information in our Economic Calendar.