Silver (XAG) Forecast: Traders Target 50-Day MA as Fed Turmoil, Dollar Strength Spark Volatility

Silver Slips as Gold Faces Dollar Pressure and Fed Uncertainty

Silver prices edged lower Wednesday, tracking a mild decline in gold as traders weighed a firm U.S. dollar, looming inflation data, and growing speculation about a Federal Reserve rate cut. Silver is holding within a short-term range of $36.96 to $39.06, with technical indicators pointing to a potential test of lower support levels.

At 12:27 GMT, XAG/USD is trading $38.40, down $0.21 or -0.55%.

The market remains cautious heading into Friday’s Core PCE inflation report and a long holiday weekend. Gold’s pullback from a two-week high reflects dollar strength and profit-taking, with implications for silver as it often mirrors sentiment in the precious metals complex.

How Is the Federal Reserve Turmoil Influencing Metals?

President Trump’s move to fire Fed Governor Lisa Cook has raised significant concerns about central bank independence. Cook’s legal team is preparing a lawsuit to block her removal, creating legal uncertainty that may weigh on the Fed’s credibility and market confidence. For gold, which thrives on policy instability and falling rates, this political interference adds a bullish undertone.

Yields are reacting accordingly. The two-year Treasury yield has fallen to 3.6540%, its lowest since May, while the 30-year yield sits higher at 4.9223%, indicating a split view on inflation and policy direction. The CME FedWatch Tool now shows an 87% chance of a 25 basis point rate cut in September—a scenario that would typically support non-yielding assets like gold and, by extension, silver.

What Key Levels Should Silver Traders Watch Now?

Technically, silver is approaching critical support. The 50-day moving average at $37.60 is a trend indicator and downside magnet, closely followed by a 50% retracement level at $37.40. Below that, $36.96 and $36.21 form key bottoms that would signal a deeper retracement if breached.

On the upside, the breakout trigger is last week’s swing high at $39.06. A close above that level could open the door to retest the 14-year high at $39.53, with little resistance up to $44.00 according to longer-term charts.

Silver Outlook: Downside Watch but Bullish Bias Holds Above $37.60

As long as silver holds above its 50-day average, the broader bullish bias remains intact. Gold fundamentals continue to offer tailwinds, especially if inflation data confirms a softening trend and legal wrangling further disrupts confidence in Fed policy. Traders should closely monitor the $37.60 level and Friday’s Core PCE release for short-term directional cues.

More Information in our Economic Calendar.