Silver (XAG) Forecast: Falling Yields Support Rally, but $31.77 Resistance Looms Large

The technical picture reveals a critical juncture for silver traders. The metal has established strong support at $29.64, reinforced by a nearby bottom at $29.68. Current trading above the pivot point of $30.61 has transformed this level into a key support zone, with prices last quoted at $30.85.

Bulls face substantial overhead resistance, with the 50-day moving average at $31.77 presenting the first major hurdle. Beyond this lies a significant retracement zone spanning from $32.28 to $32.89. Given the prevailing downward trend, sellers are expected to emerge as prices approach this resistance band.

Treasury Yields Signal Market Shift

The 10-year Treasury yield’s decline to 4.219%, reaching its lowest point since October 30, has provided fresh support for silver prices. Lower yields typically boost the appeal of precious metals by reducing the opportunity cost of holding non-yielding assets. This development gains significance as the Federal Reserve signals a potential “gradual” approach to lowering interest rates, according to recent meeting minutes.

Political Risks Add Market Complexity

The dollar’s retreat to its lowest level since November 12 has supported silver prices. However, President-elect Trump’s proposed tariff hikes targeting China, Mexico, and Canada could fuel domestic inflation, potentially forcing the Fed to maintain higher rates longer than expected. Market participants currently price in a 66.3% probability of a December rate cut, according to CME Group’s FedWatch Tool.

Bears Hold Upper Hand Despite Recent Rally

The short-term outlook for silver appears bearish despite recent gains. While falling Treasury yields provide some support, the combination of technical resistance overhead and potential inflationary pressures from proposed trade policies suggests limited upside potential. Traders should watch for selling pressure near the $31.77-$32.89 resistance zone, with the upcoming U.S. jobs report potentially triggering increased volatility.

More Information in our Economic Calendar.