Silver (XAG) Forecast: Weekly Reversal Pattern Threatens Silver Rally Near 14-Year Highs

Silver Holds Firm Below 14-Year High as Fed Uncertainty Spurs Safe-Haven Demand

Silver (XAG/USD) settled near $38.16 this week, down 0.62% from Monday’s 14-year peak of $39.13, as traders balanced rising geopolitical risks against mixed Federal Reserve signals. The white metal outperformed gold, a sign of resilient demand even as profit-taking emerged near multi-year highs.

The $39.13 high, the strongest level since 2011, underscored robust appetite for silver during periods of monetary uncertainty. Solid demand throughout the week suggests broader market confidence in silver’s role as both a store of value and industrial input.

Rate Cut Expectations and Policy Risk Anchor Precious Metals

U.S. 10-year Treasury yields held steady near 4.42%, reflecting bond market confidence in a dovish policy turn later this year. Markets now price in 45 basis points of Fed rate cuts by year-end, with September widely viewed as the starting point.

Fed Governor Chris Waller’s remarks supporting a potential July or September cut helped reinforce expectations of lower rates. At the same time, political pressure resurfaced after former President Trump confirmed he is reviewing whether he could remove Fed Chair Jerome Powell if re-elected. While no immediate action is expected, such uncertainty has historically supported demand for precious metals as central bank independence comes into question.

Dollar Strength Capped by Fed Outlook

The U.S. Dollar Index (DXY) gained 0.61% over the week, closing near 98.46. However, gains were modest in the context of soft inflation data and firm rate-cut pricing. With further policy easing expected, upside in the dollar appears limited—an environment that typically supports dollar-denominated assets like silver.

Inflation and Trade Risks Support the Bullish Case

Consumer price data came in as expected, with headline CPI rising 0.3% month-over-month and core CPI up 0.2%. Producer prices were unchanged, offering no fresh pushback to dovish market expectations. The absence of inflation surprises has strengthened the case for easing, removing a major obstacle for precious metals.

Trade tensions also remain a key factor. Renewed tariff threats on EU goods and expanded sanctions on Russia’s energy sector continue to fuel demand for safe-haven assets. Ongoing negotiations with Japan and Indonesia further add to the uncertainty that traditionally supports metals like silver.

Market Forecast: Fundamentals Remain Supportive Into Late Q3

Looking ahead, silver’s outlook remains fundamentally strong. Expectations for Federal Reserve rate cuts in September, combined with capped dollar strength and muted inflation pressures, support continued investor interest in the metal. Meanwhile, geopolitical risk premiums remain elevated as global trade policies remain in flux.

Industrial demand is also contributing, with growth in solar and electronics sectors sustaining physical consumption. As long as U.S. economic data stays soft and the Fed maintains a dovish tone, silver stands to benefit from both policy-driven and real-economy tailwinds through late Q3.

Technical Outlook

Silver remains in a primary uptrend, but last week’s weekly close formed a reversal top, suggesting that selling pressure may now be outweighing demand at current levels. While this pattern does not invalidate the uptrend, it increases the risk of a near-term pullback, potentially lasting two to three weeks.

The key downside pivot is $37.20. A sustained move below this level would confirm the correction is underway. On the other hand, a breakout above $39.13 would invalidate the reversal and signal a resumption of the broader uptrend.

A close below $35.28 would mark a trend reversal on the weekly chart and represent a more significant technical breakdown. In that case, silver could retest the 52-week moving average near $31.98—an area that may attract longer-term buyers but signals a much deeper correction.

More Information in our Economic Calendar.