Silver (XAG) Forecast: Dollar Strength and China Worries Pressure Market Outlook

Silver Pressured by Dollar Strength, Weak Gold, and China Concerns

Silver prices continued to slide on Friday, logging their third consecutive daily loss and deepening the week’s downside. The decline is being driven by a combination of U.S. dollar strength, a pullback in gold, and growing concerns over physical demand—especially out of China.

At 10:39 GMT, XAG/USD is trading $33.08, down $0.50 or -1.49%.

Dollar Strength Undermines Bullion Complex

The U.S. dollar index (DXY) edged up 0.2% on Friday, putting immediate pressure on precious metals across the board. As silver is priced in dollars, a stronger greenback raises costs for foreign buyers, tightening investment flows. This FX move comes just as silver was struggling to hold onto recent gains, compounding the technical and macro headwinds.

Gold Correction Adds Pressure

Silver also followed gold lower after the yellow metal posted a record high at $3,057.59 before retreating. Gold’s pullback has largely been attributed to profit-taking and technical rebalancing, but it has also softened sentiment across the metals complex. Silver, being more volatile and less supported by safe-haven flows, bore the brunt of the selloff.

China Demand Uncertainty Weighs on Outlook

Physical demand from China—the world’s largest consumer of industrial silver—remains a key concern. Market participants are watching for signs of economic rebound or policy support, but near-term demand indicators remain tepid. Without stronger physical offtake or ETP inflows, silver is left more exposed to macro headwinds than gold.

Technical Support in Play

From a technical standpoint, silver is now trading near a critical zone. The first key support sits at $32.53, a Fibonacci retracement level. More important, however, is the support cluster near $31.94–$31.81, formed by the 50-day moving average and a major 50% retracement level. A break below this area could trigger a deeper correction. On the upside, bulls need a close above $34.24 to confirm a return to the recent uptrend, with $34.87 as the next resistance target.

Market Forecast: Further Downside Risk in Near Term

With gold under corrective pressure, the dollar firming, and demand signals from China remaining muted, silver is vulnerable to further downside in the short term. Traders should closely watch the $31.81–$31.94 support range. A decisive break could accelerate selling, while a bounce here may offer a near-term entry for those still bullish on silver’s broader trend.

More Information in our Economic Calendar.