Silver (XAG) Forecast: Bearish Trends Persist with 200-Day Moving Average in Focus

Silver Faces Downward Pressure: Will the Fed’s Stance Keep Prices Under Pressure?

Silver prices are under scrutiny, as Federal Reserve signals of prolonged higher interest rates weigh heavily on the market. Combined with a strengthening U.S. dollar and rising Treasury yields, silver’s near-term prospects appear increasingly bearish despite lingering geopolitical risks.

At 13:19 GMT, XAG/USD is trading $29.22, down $0.14 or -0.49%.

Is the Fed’s Hawkish Stance a Game-Changer for Silver?

The Federal Reserve’s latest projections for two rate cuts in 2025, fewer than previously forecast, have shifted market expectations. Chair Jerome Powell’s emphasis on cautious easing to manage inflation has bolstered the U.S. dollar, which hit multi-year highs. For silver, this means a less favorable environment, as higher interest rates and a stronger dollar reduce its appeal. Rising 10-year Treasury yields, which recently topped 4.5%, add another layer of pressure, as they increase the cost of holding non-yielding assets like silver.

Could Geopolitical Risks Spark a Safe-Haven Rally?

While silver often benefits from geopolitical uncertainty, recent developments have provided only limited support. The looming risk of a U.S. government shutdown could disrupt federal operations, potentially shaking market confidence. Although such scenarios have historically triggered safe-haven buying in precious metals, silver’s muted response suggests that macroeconomic headwinds from the Fed’s policies are dominating its price action.

Are Chart Patterns Pointing to Further Declines?

Technical signals point to a bearish outlook for silver, with prices struggling to hold above critical support levels, indicating weak momentum. The metal is trading below the 200-day moving average of $29.62, reinforcing the likelihood of further declines. A major downside target lies at $27.71. However, if silver recaptures the 200-day moving average, it could trigger a short-covering rally as bargain-hunters enter the market.

Traders are focusing on upcoming U.S. economic data, including the core PCE inflation index and GDP reports, which could influence the dollar and, in turn, silver prices. Without a catalyst to break the current pattern, silver is likely to face continued selling pressure.

What’s the Short-Term Outlook for Silver?

Silver prices are expected to remain subdued in the short term, as the combined impact of a strong dollar and rising yields overshadows potential safe-haven demand. A test of lower support levels appears likely unless economic data weakens significantly, undermining dollar strength. Geopolitical risks and weaker economic indicators could provide temporary relief, but the broader outlook remains bearish for now.

Traders should watch key data releases closely, as these will play a pivotal role in shaping silver’s next moves. Additionally, reaction to the 200-day moving average at $29.62 will set the tone.

More Information in our Economic Calendar.