Silver (XAG) Forecast: $28.31 Bounce Sparks Talk of 50% Retracement to $31.45

Silver Rebounds Sharply But Faces Overhead Pressure

Silver prices surged on Monday, rebounding off a critical support zone between $28.40 and $26.87 after last week’s brutal selloff. An intraday low of $28.31 held early in the session, prompting speculative buying and bargain-hunting. This move lifted silver toward a near-term pivot at $31.45, but analysts caution that broader headwinds remain in place.

At 10:45 GMT, XAG/USD is trading $30.34, up $0.75 or +2.54%.

Divergence From Gold Likely Short-Lived

Despite today’s outperformance, silver remains under broader pressure, diverging temporarily from gold, which also dropped sharply before staging a modest recovery. Gold continues to attract central bank support and benefits from a safe-haven bid. In contrast, silver lacks institutional backing, and its heavy industrial exposure makes it more vulnerable to the current macro climate.

Tariffs and Recession Risk Undermine Industrial Demand

President Trump’s sweeping tariff plan, which includes a baseline 10% tariff on goods from 180 countries, has rattled manufacturing sentiment globally. China’s retaliatory 34% tariffs, especially on U.S. semiconductors, directly impact silver-intensive sectors. The resulting drag on global manufacturing demand is weighing on silver, as industrial buyers in Asia and Europe retreat.

Margin Calls, Strong Dollar Add to Selling Pressure

Last week’s broad market collapse forced liquidation across risk assets. Silver bore the brunt of this deleveraging as Dow futures tumbled more than 2,000 points and margin calls escalated. While gold retained partial support from its safe-haven status, silver’s weaker monetary appeal left it more exposed. A strengthening dollar and rising real yields have further limited upside potential, particularly as the Fed pushes back on rate cut expectations.

Technical Levels and Policy Risks in Focus

If Monday’s bounce holds, silver may attempt a retest of resistance at $31.45. But traders are increasingly leaning toward a “sell the rally” stance unless industrial demand shows signs of recovery or trade tensions ease. With the dollar firm and the Fed maintaining a hawkish tone, upside in silver remains capped unless external pressures ease.

Outlook: Bearish Bias With Tactical Bounce Possible

Despite today’s rebound, silver remains under structural pressure. The combination of weaker industrial demand, ongoing trade tensions, and limited monetary demand suggest rallies will likely be sold.

Unless upcoming Fed commentary or inflation data materially shifts sentiment, silver is expected to remain in a defensive posture. Traders should monitor CPI data and Fed minutes closely, as any sign of easing could trigger a stronger recovery—but for now, pressure dominates the trend.

More Information in our Economic Calendar.