Can Silver Hold Above Key Support, or Is a Deeper Pullback Coming?
Silver (XAG/USD) is struggling to maintain its bullish momentum, dipping for the second consecutive session as economic uncertainty and shifting Federal Reserve expectations weigh on the metal.
🔹 Key Resistance: $34.24 – A break above this level could trigger a rally toward $35.40.
🔹 Critical Support: $31.89 – A breakdown below this could lead to a deeper correction.
🔹 Macroeconomic Pressure: Fed policy uncertainty, rising inflation, and China’s demand outlook are driving volatility.
Silver Struggles as Resistance Holds Strong
Silver prices retreated again on Thursday, failing to breach the $34.24 resistance zone. The metal’s decline has brought it closer to a key support range between $32.53 and $31.81, with the 50-day moving average at $31.89 acting as a critical level for buyers.
📊 Technical Outlook:
✅ If silver breaks above $34.24, it could target the $34.87 – $35.40 range, signaling renewed bullish momentum.
❌ A move below $31.89 would confirm downside risks, potentially triggering a broader correction.
At 09:46 GMT, XAG/USD is trading at $33.55, down 0.70% on the day.
Fed’s Policy Uncertainty & Inflation Concerns Weigh on Silver
The Federal Reserve’s latest meeting has left traders uncertain about monetary easing prospects. While Chair Jerome Powell reiterated expectations for two rate cuts in 2025, the Fed also raised its inflation forecast to 2.7% (from 2.5%) and cut GDP growth expectations to 1.7% (from 2.1%).
⚠ Why This Matters for Silver:
✔ Higher inflation and slower growth raise concerns about stagflation, impacting industrial metals like silver.
✔ Treasury yields fell, with the 10-year yield dropping to 4.257%, reflecting shifting rate cut expectations.
✔ Silver, which benefits from lower interest rates, remains vulnerable to short-term economic uncertainty.
Geopolitical & Trade Tensions Support Safe-Haven Demand
While silver has underperformed gold, ongoing geopolitical risks are providing some support for the metal.
🔹 U.S. Trade Tariffs – Higher import costs contribute to inflation, influencing commodity prices.
🔹 China’s Economic Outlook – Weak industrial demand from China could pressure silver prices.
🔹 Middle East Conflicts – Renewed geopolitical tensions are keeping safe-haven demand intact.
ETF holdings and industrial demand trends (especially solar panels and electronics) provide long-term support, but short-term price action is dictated by global economic shifts.
Market Outlook: Volatility Ahead, Key Levels to Watch
📌 Key Support: $31.89 – A decisive break below could trigger further selling pressure.
📌 Resistance Zone: $34.24 – $35.40 – Silver must clear this range to regain bullish momentum.
📌 Macro Triggers: Fed rate decisions, inflation trends, and China’s industrial demand will be critical for silver’s next move.
With high market uncertainty, silver traders should brace for continued volatility and closely monitor global economic developments.
⚠️ Disclaimer
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions.
