Silver (XAG) Forecast: Will CPI Revive the Silver Rally or Extend Losses?

Spot Silver Plunges on Jobs

Spot Silver (XAGUSD) settled at $67.75 last week after reaching $77.01 early in the week. The decline of $7.53, or 10.01%, was the steepest weekly drop of the year. A stronger-than-expected Non-Farm Payrolls report crushed rate-cut expectations, the 10-Year U.S. Treasury yield jumped, and the U.S. Dollar Index firmed hard. Equity liquidation added fuel to the selling. Spot Silver (XAGUSD) finished just 18 cents above the weekly low of $67.57 with sellers still in control heading into the weekend.

Weekly Spot Silver (XAGUSD) Technical Analysis

Spot Silver (XAGUSD) dumped last week after crossing to the weak side of a major long-term Fibonacci level. The main trend is down as evidenced by the lower-top, lower-bottom chart pattern. A trade through $89.38 will change the main trend to up and a move through $61.01 will signal a resumption of the downtrend.

The minor trend turned down last week when sellers took out the swing bottom at $70.86. This shifted momentum to the downside.

The downside momentum created by Friday’s plunge could lead to follow-through selling pressure this week. Our target is the 52-week moving average at $60.91. Since it forms a cluster with the main bottom at $61.01, I expect aggressive counter-trend traders to start buying again because this represents a value area. If it fails, we could be looking at an eventual break into the October 2025 bottom at $45.55.

I still think traders are more interested in being passive buyers than aggressively taking out offers. But if they do come in strong, the 61.8% level at $74.63 is the price they have to overcome with conviction to start turning the market around.

Jobs Report Shredded the Rate-Cut Trade

The rate trade is dead and the Non-Farm Payrolls report killed it. Labor market numbers came in strong enough to take the entire easing narrative off the table. That is the single worst outcome for Spot Silver (XAGUSD) right now because the rally was built on expectations that the Federal Reserve would eventually pivot toward lower rates.

The 10-Year U.S. Treasury yield surged on the data and the U.S. Dollar Index rallied alongside it. Both hit Spot Silver (XAGUSD) from different angles. Yields move money into instruments that actually pay a coupon. A stronger dollar prices international buyers out of the market entirely. The combination broke the trade that was holding the metal up.

Leveraged longs started unwinding immediately. Speculative positioning had been stretched heading into the report and the exits were not orderly. Momentum traders piled on and the selling fed on itself through Friday’s close. The conversation has completely changed. Two weeks ago traders were positioning for cuts. Now the debate is whether the Federal Reserve holds or goes higher. That is a massive swing in sentiment and Spot Silver (XAGUSD) was not built for it.

Why Did Equity Losses Hit Silver Hardest?

Because Spot Silver (XAGUSD) was one of the biggest winners of the year and that made it the easiest position to liquidate. When major U.S. indices drop hard and institutional accounts need to raise cash, the first thing they sell is whatever has the most profit sitting in it. Spot Silver (XAGUSD) had plenty.

The margin call dynamic accelerated everything. Equity losses forced portfolio-wide risk reduction. Commodity positions got cut not because the fundamental case changed but because the capital was needed somewhere else. Buyers never showed up. There was no stabilization attempt heading into the weekend and nobody tried to catch the knife on the way down.

This is the part that matters going forward. A market that sells off hard and bounces tells you the correction was technical. A market that sells off hard and stays down tells you the positioning shift is real. Spot Silver (XAGUSD) stayed down.

Inflation Is Hurting Silver, Not Helping

This is backwards from what most traders expect but it is exactly how the market is pricing it. Crude oil markets are tight and energy prices are elevated. That should bring inflation-hedge demand into precious metals. It is doing the opposite.

The way I see it, the policy response to inflation is what is selling Spot Silver (XAGUSD), not inflation itself. Persistent inflation means the Federal Reserve keeps rates restrictive for longer. It might even tighten further. Every time an inflation reading runs hot, the rate-cut story that was supporting this metal gets weaker.

Silver’s dual demand structure makes the problem worse. Store-of-value buyers want lower real rates. Industrial buyers need economic growth. Right now neither side is getting what it needs. The rate path is pointed higher and growth risk is rising alongside it. Both pools of demand are sidelined.

Can CPI and PPI Stop the Bleeding?

The bar for a bullish surprise just got a lot higher. The Consumer Price Index and Producer Price Index land this week against a market that has already repriced the entire rate outlook off the back of one jobs report. The Non-Farm Payrolls data did the damage. These inflation numbers decide whether it sticks.

Soft prints are the only scenario that gives bulls anything to work with and even then the reading has to come in convincingly below consensus. Anything close to expectations reinforces what the employment data already told traders about the Federal Reserve’s path. The 10-Year U.S. Treasury yield has room to run higher and the U.S. Dollar Index rally that punished Spot Silver (XAGUSD) last week is not finished unless the data breaks the pattern.

Weekly Outlook

Three forces are still working against Spot Silver (XAGUSD) heading into this week. The rate repricing from the jobs report is not finished. Equity markets remain fragile enough to trigger another round of forced liquidation across commodity portfolios. And speculative longs that survived the first wave are still exposed with nowhere to hide. The combination keeps the pressure pointed lower until something in the data breaks.

The 52-week moving average at $60.91 sits right next to the main bottom at $61.01. That cluster is the value zone where counter-trend buyers should start showing up. A break through both levels opens a move toward the October 2025 bottom at $45.55. Bulls need $74.63 with conviction before anything changes on the upside and that number is a long way from Friday’s close.

More Information in our Economic Calendar.