Silver (XAG) Forecast: Tight Range Holds — Can Fed Clarity Fuel the Next Silver Rally?

Silver Stalls Below $39.13 as Traders Brace for Fed’s PCE Signal

Silver prices are cooling off just below key resistance at $39.13 on Friday, with traders treading cautiously ahead of the U.S. PCE inflation report—widely seen as the Fed’s preferred inflation gauge. After a steady August rally, the metal is pausing just beneath July’s 14-year high of $39.53, a breakout point that could spark fresh momentum toward $44.00.

Markets are largely rangebound this morning, with broader risk assets also on hold. Equity futures are trading slightly lower, Treasury yields are stable, and the dollar is consolidating its monthly drop. All eyes are on July’s PCE numbers due Friday morning, which could reinforce or challenge the growing expectations for a September rate cut.

At 12:09 GMT, XAG/USD is trading $38.84, down $0.21 or -0.54%.

Support Builds Around $38.00 Ahead of Inflation Print

Friday’s pullback has brought silver closer to initial support at $38.09, with stronger demand expected at the 50-day moving average near $37.70. The next support levels lie at $37.40 and the June bottom at $36.96. Whether buyers step in on the dip will be a key test of near-term sentiment.

Silver has generally respected the 50-day as a pivot throughout the summer, making that level a critical gauge of trend health. So far, buyers have treated pullbacks as opportunities rather than warning signs, but a hotter-than-expected PCE could put that strategy to the test.

Fed Cut Bets Intact, But Limited Easing Ahead

Traders are still pricing in an 85%+ chance of a September rate cut, but expectations for further easing have narrowed. Fed Governor Waller recently backed a near-term cut, citing softer labor data, while Powell said in Jackson Hole the Fed is more concerned about jobs than inflation—for now.

Still, a 2.9% core PCE print—consensus estimate—could lock in one rate cut while slamming the door on follow-ups. A surprise spike north of 3% would likely drive Treasury yields higher and weigh on silver. Conversely, a cooler number could ignite fresh buying across metals.

Outlook: Silver Holds Bullish Bias, But Breakout Needs a Green Light

As long as silver holds above $37.70, the path of least resistance remains higher. A break above $39.13 opens the door for a retest of $39.53, with $44.00 on the radar beyond that. However, traders remain data-dependent. Expect rangebound action between $37.70 and $39.50 until PCE and labor data clear the air.

More Information in our Economic Calendar.