Silver (XAG) Forecast: Bullish Setup or Short-Term Correction Ahead?

Silver Eases but Holds Weekly Gain on Safe-Haven Demand and U.S. Jobs Data

Silver prices edged lower on Friday, tracking gold’s decline, but remained on course for a weekly gain as safe-haven demand persisted. Traders largely overlooked a weaker U.S. dollar, while rising Treasury yields limited silver’s upside.

Silver Holds Weekly Gain Despite Friday Pullback

Spot silver closed down 0.36% at $32.53, while silver bullion rose 4.42% for the week. Uncertainty surrounding U.S. trade policies, particularly President Donald Trump’s tariff maneuvers, contributed to silver’s weekly strength.

XAU/USD settled 0.05% lower at $2,909.55, with precious metals under pressure as Treasury yields advanced. The benchmark 10-year yield climbed two basis points to 4.303%, while the 2-year yield rose to 3.987%. Higher yields increase the opportunity cost of holding non-yielding assets like silver and gold.

Weaker Jobs Data Supports Rate Cut Expectations

February’s U.S. nonfarm payrolls report showed job growth of 151,000, below the expected 160,000, while the unemployment rate ticked up to 4.1%. The data reinforced expectations that the Federal Reserve will begin cutting interest rates in June.

The U.S. dollar index fell 0.4% on Friday to 103.72, hitting a four-month low and marking its steepest weekly drop since November 2022. Traders are now pricing in approximately 78 basis points of Fed rate cuts this year, equivalent to three 25-basis-point reductions. A weaker dollar typically boosts silver prices by making it more affordable for foreign buyers.

China’s Gold Purchases Provide Additional Support

China continued its gold purchases for the fourth consecutive month in February, according to data from the People’s Bank of China. Strong central bank gold buying has underpinned silver, given its historical correlation with gold as a monetary metal.

Market Outlook: Silver Faces Resistance from Yields but Retains Bullish Setup

Silver remains supported by safe-haven flows and expectations of Fed rate cuts but faces near-term resistance from firm Treasury yields. With the Fed signaling a cautious approach to policy easing, the market will closely watch inflation and employment data in the coming weeks.

Technically, silver soared last week after overcoming a 50% pivot at $31.81 and is now straddling the 61.8% pivot. A sustained move over this level could trigger a short-term surge into recent tops at $33.21 and $33.39. A sustained move under the 61.8% pivot could lead to a retest of the 50% level at $31.81.

Despite the choppy short-term price action, the intermediate trend remains well-supported by the 50-day moving average at $31.20 and the longer-term trend well-supported by the 200-day moving average at $30.54.

More Information in our Economic Calendar.