Silver (XAG) Forecast: Bullish Momentum Builds as Gold Strengthens, Dollar Weakens

Silver Surges on Technical Breakout, Supported by Gold and Weaker Dollar

Silver rallied sharply on Tuesday, climbing above key resistance levels as gold prices strengthened and the U.S. dollar weakened. The metal successfully tested support at $31.81—the 50% retracement level—before breaking above $32.53, the 61.8% level. Both levels now serve as key support zones.

At 21:19 GMT, XAG/USD is trading $32.95, up $0.84 or +2.61%.

Upside Momentum Targets Higher Resistance

If silver sustains its current momentum on Wednesday, it could test minor resistance at $33.21, with a breakout above $33.39 signaling a continuation of the uptrend. A move beyond this level would open the door for a push toward the October 2024 high of $34.87.

Technical indicators remain bullish, with the 50-day moving average at $31.33 providing intermediate support and the 200-day moving average at $30.55 controlling the long-term trend. Silver’s position above these levels reinforces a “buy the dip” strategy among traders.

Gold Strength Lends Support

Gold prices climbed 1% on Tuesday, driven by a weaker dollar and concerns over global economic growth. The U.S. dollar index fell to its lowest level since mid-October, making dollar-denominated metals more attractive for international buyers.

Tariff-related tensions and uncertainty in global markets have further increased demand for safe-haven assets. Analysts note that while gold remains well-supported in the current environment, any progress in Russia-Ukraine negotiations could reduce its risk premium.

Market Focus on Inflation and Federal Reserve Outlook

Traders are now closely watching upcoming U.S. inflation data, with the Consumer Price Index (CPI) set for release on Wednesday and the Producer Price Index (PPI) following on Thursday. February’s CPI is expected to rise 0.3%, according to a Reuters poll.

Expectations for a Federal Reserve rate cut in June remain strong. However, Commerzbank analysts caution that gold’s high valuation after its recent rally could limit its near-term upside. Any shifts in rate expectations will have a direct impact on silver’s movement.

Market Outlook

With silver maintaining strong technical support and gold providing a favorable backdrop, near-term price action favors further upside. A breakout above $33.39 could accelerate gains toward $34.87, while downside risks remain limited as long as prices hold above the 50-day moving average. Traders should watch upcoming inflation data and dollar movement closely for further direction.

More Information in our Economic Calendar.