Silver (XAG) Forecast: Gold Rally Fuels Bullish Momentum as Breakout Looms

Gold’s Inflation Hedge Boosts Silver Sentiment

Gold’s recent rally to a record high of $2,954.96 per ounce is not just a win for the yellow metal but also a tailwind for silver prices. With gold benefitting from heightened inflation concerns and geopolitical tensions under U.S. President Donald Trump’s trade policies, silver—often seen as a leveraged play on gold—has also gained upward momentum.

The Federal Reserve’s cautious stance on interest rates, along with potential pauses in quantitative tightening, has intensified gold’s safe-haven appeal, indirectly bolstering silver’s attractiveness to traders seeking alternative stores of value​.

At 13:09 GMT, XAG/USD is trading $33.03, up $0.32 or +0.99%.

Silver Pushes Higher, Targeting Key Resistance Levels

Silver prices climbed on Thursday, with bullish traders eyeing last week’s high at $33.39. Breaking this level could ignite a surge towards resistance between $34.87 and $35.40, setting up the metal for potentially significant gains.

Support is strong at $32.53, with a critical pivot at $31.81. The metal’s intermediate and long-term technical trends remain positive, with the 50-day and 200-day moving averages situated at $30.79 and $30.48, respectively​.

Fed Policy and Market Liquidity Support Metals

The Federal Open Market Committee (FOMC) recently opted to hold rates steady at 4.25% to 4.5%, citing inflation risks from Trump’s economic policies. With the Fed showing reluctance to cut rates, interest-bearing assets may lose appeal, drawing more investor interest to non-yielding metals like gold and silver. Additionally, discussions around pausing the quantitative tightening (QT) program could enhance market liquidity, a scenario that historically benefits precious metals​.

Inflation Fears and Tariff Uncertainty Drive Demand

Trump’s aggressive tariff strategies, including potential new tariffs on lumber, cars, semiconductors, and pharmaceuticals, are fueling fears of a global trade war. These actions threaten to drive inflation higher, reducing the purchasing power of fiat currencies. As a result, both gold and silver are gaining traction as hedges against currency devaluation and market volatility​.

Market Outlook: Silver Eyes Breakout if Gold Maintains Strength

With gold’s bullish momentum aiming for the $3,000 mark, silver could follow suit if market conditions remain favorable. A break above $33.39 would reinforce the uptrend, potentially targeting $35.40. However, traders should watch for any signs of a reversal in gold, which could prompt a short-term pullback in silver as well. For now, inflation concerns and geopolitical risks continue to support a positive outlook for the silver market.

More Information in our Economic Calendar.