Silver (XAG) Forecast: Rally or Retreat? CPI and 200-Day MA Could Decide Next Move

Can Silver Break the $29.97 Resistance?

Silver prices are moving higher today but remain below the crucial 200-day moving average at $29.97. This level is a key resistance zone for the market, and a breakout above it could spark fresh buying interest. If this happens, the next target lies at $30.54, where the 50-day moving average intersects with a short-term pivot point.

Clearing $30.54 would set the stage for a potential run toward $32.33, a significant technical milestone for silver. On the downside, a failure to breach resistance could lead to a pullback. A decline below $29.70 may see prices retesting support at $28.74, a level closely monitored by traders.

At 12:11 GMT, XAG/USD is trading $30.01, up $0.11 or +0.36%.

Will Dollar Weakness and Lower Yields Support Silver?

Silver’s modest rally has been underpinned by a weaker U.S. dollar and falling Treasury yields. The 10-year Treasury yield eased by 2 basis points to 4.771%, pulling back from recent highs, while the U.S. dollar index slipped 0.1%. These moves have made silver more attractive to international investors.

Tuesday’s data on wholesale prices, which rose less than expected, provided some relief from inflation concerns. This development helped cool Treasury yields and supported silver prices. However, the market remains cautious ahead of the release of Consumer Price Index (CPI) data later today.

How Will Inflation Data Impact Silver Prices?

The CPI report, scheduled for 13:30 GMT, is expected to show a 2.9% annual inflation increase. A weaker-than-expected reading could strengthen the case for Federal Reserve rate cuts, a scenario that tends to benefit silver.

Conversely, a stronger inflation print could undermine rate-cut expectations, potentially boosting the U.S. dollar and Treasury yields, which would weigh on silver prices. With the Federal Reserve showing no urgency to adjust rates, traders are closely watching the inflation outlook to gauge future monetary policy moves.

What’s Next for Silver Prices?

Silver prices are hovering at a pivotal level, with $29.97 acting as the key to unlocking further gains. A breakout here could push silver toward $30.54 and potentially $32.33, enticing buyers back into the market. However, failure to gain momentum could send the metal lower, testing support at $29.70 and possibly $28.74.

All eyes are on today’s CPI report, which could determine silver’s near-term direction. A softer inflation figure would support the case for rate cuts, favoring silver, while a hotter reading could strengthen the dollar and Treasury yields, applying downward pressure.

For traders, the next few sessions could reveal whether silver is poised for a breakout or a deeper retracement. Keep watch on both technical levels and macroeconomic signals for clarity on the metal’s next move.

More Information in our Economic Calendar.