Silver (XAG) Forecast: China’s Demand Uncertainty Pressures Prices

Silver Slips as Resistance Holds

Silver prices declined for a second consecutive session on Thursday, retreating after forming a minor top at $34.24. Technical indicators suggest the market remains vulnerable to further downside, with the next support zone between $32.53 and $31.81. However, the 50-day moving average at $31.89 has acted as a strong support level since late January, and a sustained move below it would signal a deeper correction.

A break above $34.24 would indicate renewed upside momentum, with the next target range between $34.87 and $35.40. Until then, traders are watching for potential downside pressure as investors reassess the broader macroeconomic landscape.

At 09:46 GMT, XAG/USD is trading $33.55, down $0.24 or -0.70%.

Fed’s Policy Uncertainty and Inflation Concerns Weigh on Silver

The Federal Reserve’s latest policy meeting reinforced uncertainty about its rate cut timeline. While Chair Jerome Powell reiterated expectations for two rate cuts this year, he also emphasized the need for more clarity on inflation and economic growth. The Fed raised its 2025 inflation forecast to 2.7%, up from 2.5%, while cutting its GDP growth projection to 1.7% from 2.1%.

Higher inflation and slowing growth have sparked concerns about stagflation, a scenario that could complicate the Fed’s ability to ease policy. Treasury yields fell, with the 10-year yield dropping to 4.257%, reflecting shifting rate expectations. This environment impacts silver, which tends to benefit from lower rates but faces headwinds from economic uncertainty.

Geopolitical and Trade Risks Support Safe-Haven Demand

Ongoing geopolitical tensions and trade concerns continue to influence silver markets. U.S. tariff policies have contributed to inflation pressures, while trade frictions with China remain unresolved. Additionally, renewed conflict in the Middle East has sustained safe-haven demand for precious metals, though silver has underperformed relative to gold.

ETF holdings and industrial demand trends remain key factors. Silver’s use in solar panels and electronics provides long-term demand support, but short-term price action is still driven by macroeconomic developments.

Market Outlook: Volatility Ahead, Key Support Levels in Focus

Silver’s broader trend remains intact, but near-term downside risks persist. A break below $31.89 could trigger further selling, while a move above $34.24 would reignite bullish momentum. With Fed policy uncertainty, inflation risks, and geopolitical factors in play, silver traders should prepare for continued price swings.

For now, the market is looking for stronger signals on rate cuts and economic growth before determining its next major move.

More Information in our Economic Calendar.