Silver (XAG) Forecast: War Premium & Gold Rally Set Stage for Silver’s Next Move

Silver Inches Higher as Gold Hits Record Territory

Silver prices advanced Friday, halting a two-day retreat despite recording a weekly loss. The precious metal’s movement reflected the interplay between gold’s record-breaking performance, surging Treasury yields, and persistent dollar strength, creating a decisive moment for market participants.

On Friday, XAG/USD settled at $33.72, up $0.05 or +0.13%.

Critical Price Levels Mark Trading Boundaries

Silver faces strategic resistance at $34.35, with heightened selling pressure expected at last week’s peak of $34.87 and the multi-year threshold at $35.40. Key support holds at the short-term pivot of $32.49, while the decisive 50-day moving average at $30.75 commands the intermediate trend. Recent price consolidation indicates mounting pressure at these technical junctures, with traders positioned for potential breakout signals.

War Premium Drives Gold to Historic Records

Gold’s relentless advance, propelled by Middle East hostilities and U.S. election uncertainty, fortified silver’s position. The yellow metal’s close at $2747.22 , securing its third consecutive weekly gain, reinforced the broader precious metals sector. Gold’s remarkable 32% year-to-date rally, despite dollar appreciation, underscores exceptional market strength. Safe-haven demand intensified as investors evaluated Israel-Iran developments. The precious metals complex maintained momentum through profit-taking waves, with gold touching an unprecedented $2,758.37 on Wednesday.

Treasury Markets Signal Economic Pivot Point

The 10-year Treasury yield advanced to 4.24% Friday, following Wednesday’s three-month peak at 4.25%. Federal Reserve officials maintained vigilance after September’s substantial 50-basis-point rate cut, emphasizing inflation concerns. Cleveland Fed’s Beth Hammack stressed the incomplete state of inflation control. The 2-year Treasury yield increased to 4.105%, reflecting market expectations for measured rate adjustments. CME’s FedWatch Tool indicates 97% odds for a 25-basis-point cut in November.

Dollar Strength Commands Market Direction

The dollar index strengthened to 104.24, locking in its fourth consecutive weekly gain. Strong U.S. economic indicators, including exceptional business spending data and enhanced consumer sentiment readings, reinforced the dollar’s position. The greenback’s strength pressed the euro to $1.0803 and the yen to 152.21. Markets factored in potential policy implications of the approaching U.S. presidential election.

Market Forecast: Technical Breakout Potential Ahead

Silver displays bullish short-term indicators, backed by safe-haven flows and gold’s persistent strength. Traders must weigh dollar appreciation and rising yields against this positive momentum. The market’s defense of $32.49 support remains crucial for sustained advancement. The $34.35 resistance level stands as the primary target for breakthrough opportunities. Intensifying geopolitical pressures and evolving monetary policy expectations point toward higher prices, contingent on gold maintaining its upward push.