Silver (XAG) Forecast: Eyes on 200-Day Moving Average as Downside Risks Grow

Is Silver Losing Support at Key Levels?

Silver prices dropped further on Tuesday, trading below a crucial retracement level at $32.49, which now serves as resistance. After breaking below its 50-day moving average of $31.49 on Monday, silver’s downside momentum has accelerated. Analysts caution that if the trend continues, silver may target prior support levels near $30.12 and $29.71, with the 200-day moving average at $28.60 emerging as a significant focus for bears. For any shift in sentiment, silver would need to recapture its 50-day moving average to reinvigorate buying interest.

Gold has been under similar pressure, sliding below its own 50-day moving average at $2,648.07 and trading near $2,604.39. While gold’s decline reinforces bearish sentiment across precious metals, silver’s technical break is more pronounced, heightening attention on potential support levels.

How Are the Dollar and Treasury Yields Affecting Silver?

A rising U.S. dollar continues to pressure silver, as a stronger dollar makes dollar-denominated assets more expensive for foreign buyers. On Tuesday, the dollar index surged to a four-month high, bolstered by optimism about fiscal policies under the Trump administration, which may stimulate economic growth. This dollar strength has magnified the typical inverse relationship with precious metals, placing additional strain on silver prices.

Higher U.S. Treasury yields are also challenging silver’s appeal. Despite a recent rate cut from the Federal Reserve, skepticism about extended dovish policy remains, especially with expectations for inflation if fiscal policies stimulate economic activity. Higher yields raise the opportunity cost of holding silver and other non-yielding assets, potentially deterring investment unless there’s a notable shift in interest rate sentiment.

What Economic Data Could Impact Silver This Week?

Traders are closely watching several key U.S. economic releases this week, with the October Consumer Price Index (CPI) due Wednesday, followed by the Producer Price Index (PPI) on Thursday and retail sales on Friday. These reports will provide insight into inflation and economic health, which could influence the Fed’s policy path. Additionally, statements from Fed Chair Jerome Powell and other officials this week may offer further perspective, adding volatility to silver as traders gauge interest rate outlooks.

Will Physical Demand Offer Support for Silver Prices?

Despite the cautious outlook, silver may find support from physical demand if prices approach critical levels. Analysts note that the $28.50 to $27.75 range could attract buying interest from industrial users and jewelers, potentially helping to stabilize prices.

While gold could see similar demand if it nears the $2,500 level, silver’s industrial use may drive a stronger bid should prices dip to those levels. In the short term, however, a firm dollar and elevated Treasury yields remain central to silver’s bearish tone, likely limiting any recovery unless the dollar weakens or demand from industrial buyers increases sharply.