Silver (XAG) Forecast: Freefall Warning—52-Week Moving Average in Sight at $29.74

Silver Under Pressure as Gold Declines and Dollar Gains

Silver (XAG/USD) settled last week at $31.15, down 4.04%, as a stronger U.S. dollar and falling gold prices weighed on the market. Broad risk-off sentiment, combined with economic data reinforcing a cautious Federal Reserve stance, kept silver under pressure. Profit-taking in gold added to the downside momentum, as traders adjusted positions in response to shifting macroeconomic conditions.

The dollar’s strength was a key factor in silver’s losses. The dollar index climbed to 107.451, making silver more expensive for international buyers and reducing demand. At the same time, stock market declines contributed to deleveraging pressure across precious metals, further limiting silver’s ability to rebound.

Gold’s Weakness Limits Silver’s Upside Potential

Gold logged its worst week in three months, driven by continued strength in the U.S. dollar and steady inflation data. The Personal Consumption Expenditures (PCE) price index rose 0.3% in January, in line with expectations, keeping the Federal Reserve on a cautious path. While the data did not significantly alter rate-cut expectations, it supported the dollar, making non-yielding assets like silver and gold less attractive.

Profit-taking in gold was another drag on silver. After hitting record highs earlier in the week, gold prices reversed lower as traders reduced positions. Historically, silver often follows gold’s direction, and the weakness in gold reinforced bearish sentiment in the silver market.

Tariff Concerns Cloud Silver’s Industrial Demand Outlook

Trade policy developments also weighed on silver, particularly due to its role as both an industrial and precious metal. President Trump’s announcement of 25% tariffs on Mexican and Canadian goods, alongside a 10% duty on Chinese imports, raised concerns over economic growth and industrial demand.

While inflation fears typically support precious metals, the risk of slowing industrial activity could offset silver’s safe-haven appeal. If tariffs disrupt manufacturing output, silver demand from key sectors such as electronics and solar technology may weaken, adding another headwind for prices.

Market Outlook: Dollar and Trade Policies Remain Key Drivers

With gold struggling to find support and the dollar continuing to strengthen, silver remains vulnerable to further downside. Economic uncertainty tied to trade policies and inflation expectations will play a critical role in price direction.

Traders should closely monitor gold’s performance, as any recovery could provide some support to silver. However, if the dollar continues to rise and industrial demand slows, silver may remain under pressure in the near term.

Technically, last week’s plunge likely created enough downside momentum to extend the weakness into a key pivot at $30.44, followed by the 52-week moving average at $29.74.

Look for buyers are the first test of $30.44 to $29.74, however, if this area fails to reverse the selling then look for a further decline over the near-term to $28.75 to $27.78.

More Information in our Economic Calendar.