Silver (XAG) Forecast: Traders Await Fed Clarity—Rate Cuts or More Uncertainty?

Inflation Data, Fed Expectations, and Stock Market Volatility

Silver advanced nearly 4% last week, reaching its highest level since late October as traders reacted to softer inflation data, Federal Reserve expectations, and strong gold prices. However, renewed volatility in the stock market and a late-week rebound in equities pressured silver and gold, trimming gains into the weekend.

Last week, XAG/USD settled at $33.80, up $1.28 or +3.93%.

Technically, silver closed in a bullish position on the weekly chart, despite Friday’s profit-taking-driven weakness.

Short-term, holding above the retracement zone at $32.53 to $31.81 will be necessary to sustain the rally at current levels and keep it on course for a drive into $34.87 to $35.40.

The longer-term outlook will remain comfortably bullish as long as the market stays above the 52-week moving average at $30.07.

Inflation Reports Strengthen Rate Cut Bets

February’s Consumer Price Index (CPI) showed a 0.3% rise, while core inflation slowed to 3.2%, reinforcing expectations that inflation is gradually cooling​. Meanwhile, the Producer Price Index (PPI) came in softer than expected, further supporting the case for monetary easing.

With inflation showing signs of moderation, traders increased bets that the Federal Reserve will move toward rate cuts later this year. A looser monetary policy would reduce the opportunity cost of holding non-yielding assets like silver, helping sustain its rally. However, Fed officials have yet to confirm a timeline for easing, leaving uncertainty in the market.

Gold’s Rally and Stock Market Volatility Impact Silver

Gold surged past $3,000 last week, supported by strong central bank demand and safe-haven buying​. Silver followed suit, benefiting from its dual role as both a monetary and industrial asset.

However, stock market volatility played a key role in price action. The Dow Jones Industrial Average fell 3.1% for its worst week since March 2023, while the S&P 500 and Nasdaq both dropped more than 2%, marking their fourth consecutive weekly losses. A late-week rebound in equities on Friday triggered profit-taking in gold and silver, pulling both metals off their highs​.

Trade Uncertainty Adds to Market Tension

Beyond inflation and Fed policy, trade risks remain a critical factor. President Trump reaffirmed plans for new tariffs on China, Canada, and the EU, raising concerns about inflationary effects and potential retaliation​.

For silver, tariffs present a mixed outlook. While trade uncertainty could increase safe-haven demand, higher import costs and retaliatory measures may negatively impact industrial sectors that rely on silver, such as electronics and solar energy. Traders are closely watching these developments for potential market-moving effects.

Market Outlook: Fed Meeting to Guide Next Move

Silver’s rally last week was largely driven by expectations of Fed rate cuts and strong gold prices, but volatility in equities and shifting risk sentiment kept gains in check. Next week’s Federal Reserve meeting will be a key catalyst for silver, with traders looking for signals on the timing and pace of future rate adjustments.

Beyond the Fed, ongoing trade risks and stock market trends will also influence silver’s next move, particularly as investors gauge broader economic uncertainty and its impact on safe-haven demand.

More Information in our Economic Calendar.