Silver (XAG) Forecast: Slips as Oil Surge, Dollar Strength Pressure Prices

Spot Silver Slips Monday as Middle East Tensions Revive Dollar and Yield Pressure

Spot Silver (XAGUSD) is trading at $80.22 Monday, down $0.58 or 0.82%. Prices dropped about 2% in early trading before finding some footing. Silver is still up sharply from early 2026 levels but the macro headwinds are back and they hit hard this morning.

China Demand and Supply Deficit Still the Bullish Foundation

China’s silver imports hit a record 836 tons in March according to Bloomberg. Retail investors were buying bars and coins while the solar power industry kept pulling in industrial supply. That kind of demand doesn’t show up one month and disappear. It’s structural.

The global silver market is heading for its sixth straight year of supply deficit. The Silver Institute puts the 2026 shortfall at 46.3 million ounces even as some industrial use softens. Stocks have already dropped 762 million ounces since 2021. The tighter the supply gets the more sensitive silver becomes to any pickup in buying.

Middle East Is the Problem Today

Fresh threats from President Trump about Iran and renewed fears the Strait of Hormuz could close again sent oil prices jumping over 6% Monday. That’s stoking inflation concerns. The Wall Street Journal noted that higher energy costs limit the Federal Reserve’s room to cut rates and that’s exactly what’s hitting silver right now. A stronger U.S. Dollar Index makes Spot Silver more expensive for buyers outside the U.S. Higher yields make non-yielding metals less attractive. Both are working against silver at the same time.

Short Term Outlook

Silver may stay under pressure over the next week or two if oil holds these gains and inflation worries keep the Fed on hold. J.P. Morgan still sees silver averaging around $81 for the full year. The tight supply picture and steady solar demand should prevent a big slide. Middle East headlines and oil prices are setting the tone right now. Watch both closely.

Technical Outlook

Technically, both moving averages are providing upward guidance with the 50-day moving average providing support at $78.98 and the 200-day moving average coming in at $61.09. Traders have been trying for four straight sessions to build a support base on the strong side of the 50-day moving average in the hopes it will attract enough buying to spike prices higher. They tried to do it on Friday, but the rally stalled at $83.06.

Spot Silver is also trading inside a long-term retracement zone at $83.61 to $74.63. A bullish catalyst will be needed to drive prices through $83.61. This could create the momentum needed to challenge the short-term retracement zone at $91.34 to $98.49.

On the downside, $74.63 is a good target, followed by a minor retracement zone at $72.03 to $69.43.

My bias is to the upside right now, but I need volume to drive an upside breakout. Otherwise, we could just drift sideways-to-higher over the near-term. I’ve seen evidence of buying on dips and although the market seems capped, I don’t think this is because of heavy selling, but rather the lack of buying.

More Information in our Economic Calendar.