Silver (XAG) Forecast: Bulls Await Catalyst as Gains Lag Gold Despite Dollar Weakness

Silver Faces Resistance After Testing $31

Silver prices ended Friday at $30.60, rising 0.51% for the day, but the market fell short of a breakout despite briefly trading above $30.98, hitting a high of $31.03. This marks another failed attempt to sustain momentum above key resistance levels, leaving traders wary of further upside. While silver remains supported above its 50- and 200-day moving averages, its inability to build on bullish technical patterns underscores lingering uncertainty.

Analysts are closely watching $31.00 as a critical resistance level. A decisive breakout above this point could pave the way for silver to reach higher targets, including $31.81 and $32.33. However, the failure to sustain buying interest above $31 suggests hesitation among traders, likely due to uncertainty surrounding industrial demand.

China’s Role in Silver Demand Remains Pivotal

China’s economic policies could have a significant impact on silver’s immediate trend. The nation is a leading consumer of industrial metals, including silver, which is vital for electronics and solar panel production. Speculation about potential tariff reductions and increased infrastructure spending has fueled optimism for stronger demand, but tangible policy announcements remain absent.

If Beijing signals a more accommodative stance, silver could benefit from renewed industrial demand. Until then, traders are likely to remain cautious, as any delay in policy clarity could weigh on sentiment.

Gold Rally Supports Silver, but Gains Lag

Gold’s rally near its record high at $2,790.17 highlights the shared fundamentals of precious metals. A weaker U.S. dollar, now at a one-month low, and falling Treasury yields have driven gold’s rise, providing indirect support for silver. The dollar’s 1.77% decline last week has created a favorable environment for both metals, as a cheaper greenback makes them more attractive to foreign buyers.

However, silver has not mirrored gold’s momentum. Its dual role as a safe haven and industrial metal means it relies more heavily on global economic activity. While gold’s safe-haven appeal has surged due to inflationary concerns and dovish Federal Reserve expectations, silver’s gains have been more restrained without a strong boost from industrial demand.

Market Outlook: Silver Needs a Catalyst

Silver remains positioned for potential upside but requires a clear catalyst to overcome resistance. If prices can decisively break above $31.00 with sustained volume, the metal could target $31.81 and $32.33. Supportive factors include dollar weakness, dovish Fed policy, and a possible uptick in Chinese demand.

Traders should monitor developments in China, as policy shifts could rejuvenate industrial demand and propel silver higher. While gold’s strength continues to lend indirect support, silver’s near-term outlook will depend on whether it can capitalize on these supportive conditions to close the gap with its precious metal counterpart.

More Information in our Economic Calendar.