Silver (XAG) Forecast: Sellers Return as Silver Fails to Break $31.29 Resistance

Silver Slips as Dollar Rebounds; Geopolitics and Fed in Focus

Silver prices retreated on Wednesday, pulling back from recent highs as a stronger U.S. dollar weighed on demand. Geopolitical tensions and Federal Reserve rate expectations remain key drivers, creating a volatile backdrop for the metal. Traders are closely monitoring both technical levels and macroeconomic indicators for clues on the next move.

At 11:59 GMT, XAG/USD is trading $30.88, down $0.34 or -1.08%.

What’s Pressuring Silver Prices?

After hitting a one-week high, silver fell as the U.S. dollar rebounded from a brief three-day slide. The dollar’s strength, which makes silver more expensive for international buyers, coincided with some profit-taking following a short-covering rally.

Safe-haven demand remains a supportive factor, particularly as geopolitical risks intensify. Russian President Vladimir Putin recently broadened the criteria for nuclear retaliation, responding to reports of U.S.-supplied long-range weapons being used by Ukraine. The escalating conflict is underpinning demand for precious metals, even as a stronger dollar creates headwinds.

Key Technical Levels to Watch

Silver faces resistance at $31.29, with the 50-day moving average at $31.77 acting as a key level. A break above this threshold could pave the way for a test of $32.28-$32.89. However, the broader downtrend suggests sellers will likely reenter at higher levels.

Support is firm at $30.61, while a more significant floor lies at $29.68. A break below this point could lead to a deeper decline, potentially targeting the 200-day moving average at $28.84. Traders are closely watching these levels as silver consolidates within a narrow range.

Macro Factors and Fed Signals

The Federal Reserve’s next move remains a critical factor for silver. Markets currently see a 58.9% chance of a 25-basis-point rate cut in December, though recent economic data and commentary suggest rates may stay higher for longer. Rising Treasury yields, tied to investor expectations of prolonged monetary tightening, further reduce the appeal of non-yielding assets like silver.

ANZ analysts emphasized that while a Fed pause may exert short-term pressure, geopolitical risks, robust physical demand, and easing monetary conditions are likely to maintain a favorable long-term outlook for silver.

What’s Next for Silver?

In the short term, silver appears vulnerable to additional downside, with $30.61 and $29.68 providing critical support levels. If the metal holds these levels, geopolitical tensions and safe-haven demand could keep prices steady. However, a stronger dollar and hawkish Fed commentary may limit upside potential. Breaking through $31.77 would signal bullish momentum, but sellers are expected to dominate near $32.28.