Silver (XAG) Forecast: Prices Drop as Gold Weakness and Strong Dollar Weigh on Market

Silver Under Pressure

Silver is trading lower on Friday, reflecting broader weakness in the precious metals market as gold extends its decline. Silver’s main trading range is between $28.74 and $33.39, with a key downside target at the retracement zone of $31.06 to $30.52.

The 50-day and 200-day moving averages, positioned at $30.92 and $30.51 respectively, add to this critical support area.

Technical buyers may emerge on a test of this zone, but failure to hold could accelerate the downturn. On the upside, resistance is noted at the long-term 50% retracement level of $31.81​.

At 12:11 GMT, XAG/USD is trading $31.15, down $0.11 or -0.36%.

Gold’s Weakness Spills Over to Silver

Gold is also on the back foot, logging its second consecutive session of losses and the third in four sessions. The metal is approaching key technical support levels, including $2,790.17 and the 50-day moving average at $2,770.22. A bearish weekly reversal top could signal a more extended correction in gold, which would likely drag silver lower as well​.

Stronger Dollar Adds to Downward Pressure

A stronger U.S. dollar is a significant factor weighing on both silver and gold. The dollar index has surged to 107.451, up nearly 0.9% on Thursday. This strength is driven by risk-off sentiment after U.S. President Donald Trump announced 25% tariffs on Mexican and Canadian goods, alongside a 10% duty on Chinese imports. A strong dollar typically pressures silver prices by making it more expensive for international buyers​.

Inflation Data in Focus

Market participants are also eyeing the U.S. Personal Consumption Expenditures (PCE) data, due later today. Expectations for a 0.3% monthly rise and a 2.5% annual increase in PCE could influence Federal Reserve policy. Softer inflation data might support gold and silver by raising the chances of further Fed rate cuts. However, if inflation remains firm, it could bolster the dollar, adding more downside risk to silver​.

Market Outlook: Bearish Sentiment Prevails

The technical and fundamental setup suggests a bearish outlook for silver in the short term. Key support at $30.52 will be closely watched, but a break below this level could trigger a sharper decline. Resistance at $31.81 limits upside potential, particularly as gold faces the possibility of a multi-week correction. Traders should remain cautious and monitor dollar movements and PCE data for potential shifts in sentiment.

More Information in our Economic Calendar.