Silver (XAG) Forecast: Will Dollar Weakness Spark a Rebound?

Silver Market Update: Will the Dollar Pause Bring Relief to Silver?

Silver prices inched higher on Monday, recovering from last week’s steep sell-off as the U.S. dollar’s rally paused. The market remains range-bound, with traders analyzing critical levels and upcoming macroeconomic developments to gauge the next move.

At 11:18 GMT, XAG/USD is trading $30.78, up $0.52 or +1.72%.

Can Silver Break Key Resistance Levels?

Silver is consolidating near $31.29, a pivotal level that could determine its direction. A push above this level may lead to a test of the 50-day moving average at $31.66, a break of which would suggest a shift toward bullish momentum. On the downside, a breach of last week’s low at $29.68 could spark a sharper decline, potentially targeting the 200-day moving average at $28.76. Traders are closely watching these levels for signs of sustained momentum in either direction.

Is the Fed Driving Silver’s Recent Volatility?

Silver’s significant losses last week were largely tied to a stronger dollar, fueled by reduced expectations for aggressive Federal Reserve rate cuts. The dollar index gained 1.6% but has now stabilized below its one-year high. This pause has eased some of the pressure on silver prices, as a weaker dollar makes the metal more accessible to international buyers.

This week, attention turns to Fed policymakers, with seven officials set to deliver speeches. Futures indicate a 60% chance of a December rate cut, though inflation concerns and rising Treasury yields may lead the Fed to adopt a more cautious stance.

What Role Will Economic Data Play?

Upcoming U.S. economic reports, including housing, consumer confidence, and manufacturing data, could heavily influence market sentiment. Meanwhile, 10-year Treasury yields have climbed to 4.43%, reflecting inflation concerns and optimism around fiscal expansion under President-elect Donald Trump. While long-term inflationary pressures may support silver, near-term challenges stem from continued dollar strength.

Will Silver Hold Its Ground or Retreat?

In the short term, silver is likely to remain within its current range, with $31.29 as a critical resistance level and $29.68 offering key support. The dollar’s movement, Fed commentary, and economic data will be decisive in shaping the metal’s direction. Longer-term, inflationary trends tied to potential fiscal policies may provide a supportive backdrop for silver.