Silver (XAG) Forecast: Gold’s Strength Supports Bullish Outlook as Traders Eye $32.65 Breakout

Silver Inches Higher as Traders Await Breakout Catalyst

Silver prices are slightly higher on Thursday after encountering resistance between $32.53 and $32.65. This upper boundary remains a key level, as a breakout above $32.65 could trigger accelerated buying, with the next major upside target at $34.87.

The metal is currently trading within a retracement zone between $31.81 and $32.53. A breakdown below $31.81 could expose silver to renewed selling pressure, potentially testing this week’s low of $31.25. Further support is seen at $31.17 and $30.72, both representing key 50% retracement levels.

At 12:26 GMT, XAG/USD is trading $32.27, up $0.03 or +0.10%.

Bullish Bias Remains Intact

Silver maintains a bullish bias as it continues to trade well above its 50-day moving average of $30.67 and its 200-day moving average of $30.37. These technical levels suggest underlying strength, with traders waiting for a clear catalyst to push prices above $32.65.

However, if bearish momentum develops, silver could drop below $31.81, increasing downside pressure. The market remains in a consolidation phase, with buyers and sellers looking for signals from broader macroeconomic trends.

Gold Strength Provides Support for Silver

Gold prices are rebounding after a two-day pullback, climbing back above a key pivot level at $2,903.56. This puts gold within striking distance of its all-time high at $2,942.78. The correlation between gold and silver means strength in gold is supportive for silver prices, potentially attracting fresh buying interest in the latter.

Gold’s recent gains have been fueled by uncertainty surrounding U.S. trade policies and a weakening U.S. dollar. Additionally, upcoming inflation data—particularly the Producer Price Index (PPI)—could influence gold’s next move, with any bullish momentum spilling over into silver.

Inflation Data and Treasury Yields in Focus

Stronger-than-expected U.S. inflation data earlier this week initially pressured gold and silver, as higher Consumer Price Index (CPI) figures reduced expectations for Federal Reserve rate cuts. January’s CPI came in at 0.5% month-over-month, exceeding forecasts of 0.3%, while annual inflation hit 3%. The hotter-than-expected reading pushed Treasury yields higher, weighing on metals.

However, yields have since pulled back as traders await Thursday’s PPI release for further clarity on inflation trends. A lower-than-expected PPI reading could ease rate hike fears, providing additional support for gold and silver. Conversely, stronger wholesale inflation could lift yields and pressure metals prices.

Silver Market Outlook: Awaiting a Breakout

Silver’s near-term outlook hinges on whether it can clear resistance at $32.65. A decisive move above this level could open the door to a rally toward $34.87. However, failure to break higher may lead to renewed selling, especially if gold struggles to maintain its rebound or if inflation data lifts Treasury yields.

Traders should closely monitor gold’s price action, inflation reports, and Fed rate expectations. With silver holding above key moving averages, the bullish trend remains intact, but a breakout catalyst is needed for the next leg higher.

More Information in our Consumer Price Index (CPI).