Silver was supposed to benefit from inflation anxiety, but this Silver price forecast now turns on the opposite risk: inflation may be forcing traders to price in a tighter Federal Reserve and a stronger US Dollar.
According to FXStreet, Silver (XAG/USD) traded around $57.00 on Thursday, near a seven-month low, after a nearly 12% sell-off across the previous two days. That’s not a routine pullback. It’s a fast reset in a market that had been leaning on a friendlier macro backdrop than the one now appearing in front of it.
“Silver (XAG/USD) posts moderate losses on Thursday, trading at seven-month lows around $57.00 at the time of writing, after a nearly 12% sell-off in the previous two days.”
Silver's $57 Slide Turns a Hot Rally Into a Fed Inflation Trade
The tension is blunt: silver’s inflation-hedge appeal is colliding with the market’s fear of higher rates. FXStreet says rising bets on Fed rate hikes later in the year have hammered precious metals this week, while investors wait for the US Personal Consumption Expenditures (PCE) Price Index for May.
The PCE print matters because the market is no longer treating silver as a standalone chart trade. It’s treating XAG/USD as a Fed trade.
FXStreet reports that upbeat US macro data, including improvement in the labour market and above-target inflation, has pushed Fed officials toward a more hawkish stance in recent weeks. Markets are now pricing a 32% chance of a rate hike at next month’s meeting and a 65% probability of some monetary tightening in September.
That repricing has lifted US Treasury yields and pushed the US Dollar higher. For a non-yielding metal priced in dollars, that’s a hostile combination.
The before-and-after setup is sharp:
- Before: Silver could lean on inflation concern and precious-metal demand.
- After: The same inflation concern is feeding rate-hike bets.
- Before: The chart looked stretched higher.
- After: The chart is trying to hold a seven-month low.
- Before: Bulls could point to momentum.
- After: Bulls need the PCE data to stop the macro pressure.
For cross-asset readers, this same inflation catalyst is also central to XOOMAR’s coverage of Thursday's Core PCE Could Crack Bitcoin's $59K Line and our rate-policy read on 2% Inflation Forces Bank of Japan Rate Hikes Fight.
The Numbers Behind XAG/USD's Seven-Month Low and Two-Day 12% Drop
FXStreet has XAG/USD at $57.14, extending a bearish near-term bias. The immediate fight is around $57, but the more important technical line sits just below it: the December 4, 2025 low near $56.45.
If that gives way, FXStreet flags the next support area at the October and November 2025 highs, in the mid-range of the $54.00s. Below that, the November 21, 2025 low at $48.64 becomes the next listed downside marker.
Resistance is just as clear. Any recovery has to deal first with the previous support area near $61.40. After that, the next hurdles sit at the June 22 high in the $67.00 area and the June 17 high near $71.60.
| Level | Role in the setup |
|---|---|
| $57.14 | Reported XAG/USD level in FXStreet’s analysis |
| $56.45 | December 4, 2025 low, current downside line to defend |
| Mid $54.00s | Next support area from October and November 2025 highs |
| $48.64 | November 21, 2025 low |
| $61.40 | First major resistance area on recovery attempts |
| $67.00 area | June 22 high |
| $71.60 | June 17 high |
The momentum signals show stress, not proof of a bottom. FXStreet says the 4-hour RSI (14) is near 20, an oversold reading. The MACD histogram remains negative but is converging toward zero, suggesting bears might be tiring.
XOOMAR analysis: a fast two-day fall often raises questions about stop-losses and forced selling, but the supplied source does not provide positioning or flow data. So the cleaner read is this: the chart is stretched, but the macro trigger has not been removed.
US Inflation Data Could Decide Whether Silver Bulls Get Relief or Another Leg Lower
The market’s next test is the US PCE Price Index for May. FXStreet says PCE inflation is expected to accelerate to 4.1% year-on-year, its highest level in three years, and adds that these figures predate the decline in crude prices.
That timing matters. If the data confirms the hawkish Fed repricing, silver bulls get little help from an oversold chart. Higher Treasury yields and a stronger dollar would keep pressure on XAG/USD because silver pays no income and becomes more expensive for non-dollar buyers when the dollar strengthens.
There are two clean scenarios.
- Cooler or less alarming PCE: Silver could attempt a relief rebound from oversold conditions, especially if the $56.45 area keeps holding.
- Hotter or confirming PCE: Traders may press the move below current support, with the mid $54.00s becoming the next area in focus.
This is the number beneath the headline: silver traders are not just watching inflation. They’re watching whether inflation pushes expected policy rates higher fast enough to lift yields and keep the dollar bid.
That’s why this Silver price forecast cannot rest on RSI alone. Oversold can stay oversold when the Fed narrative is moving against the asset.
Silver Traders, Miners, Industrial Buyers, and Central Banks Are Reading This Drop Differently
Speculative traders see the cleanest signal. The near-term trend is bearish, support is being tested, and the first meaningful recovery zone is far above spot at $61.40. Momentum traders may treat rallies into resistance as selling opportunities unless the PCE data weakens the rate-hike case.
Contrarian traders see something else: RSI near 20 and a MACD histogram that is still negative but converging toward zero. That combination can support a rebound attempt, but only if the macro tape stops punishing metals.
For miners and industrial buyers, the source gives no company-level data, margin figures, procurement plans, or demand numbers. So the implications must stay mechanical. Lower silver prices can ease input pressure for industrial users in electronics and solar energy, sectors FXStreet identifies as key users of silver. But volatility makes timing harder. A buyer may like the price. A treasurer may hate the chart.
The central-bank angle is narrower. This is really a Fed story. FXStreet ties the move directly to hawkish Fed signals, Treasury yields, and the dollar. Until that chain breaks, reserve-style buying narratives are secondary to policy repricing.
Past Silver Washouts Show Why Violent Drops Don't Always Mark a Durable Bottom
The supplied technical map does not include prior liquidation episodes or positioning history. That matters because it limits what can be claimed. The evidence here is chart-based: seven-month lows, a near 12% two-day decline, oversold RSI, and named support and resistance zones.
Silver’s dual identity helps explain the violence. FXStreet notes that silver trades as a precious metal, but also carries industrial exposure through uses in electronics and solar energy. That mix can make macro shocks hit from more than one direction. Higher yields hurt the precious-metal side. Worries around economic momentum can complicate the industrial side.
XOOMAR analysis: a technical bounce and a trend reversal are different trades. A bounce can come from oversold momentum. A reversal needs the dollar, yields, and Fed expectations to stop moving against silver.
Right now, the source supports the first possibility more than the second. The market is stretched. It is not yet repaired.
Silver Price Forecast: XAG/USD Needs Cooler PCE and a Weaker Dollar to Reclaim Momentum
The near-term Silver price forecast is conditional. XAG/USD can stabilize if the PCE print cools the rate-hike narrative, Treasury yields ease, and the US Dollar loses momentum. Without those conditions, rallies toward $61.40 are likely to face selling pressure.
Base case, grounded in the supplied data: silver chops around the $57 area first, with volatility staying elevated until the inflation print and Fed repricing settle. The $56.45 level is the immediate line to watch. A clean break shifts attention to the mid $54.00s, then $48.64 if selling deepens.
The bearish risk is straightforward. A hot PCE reading could strengthen the market’s existing view that monetary tightening is still on the table, validating the move in yields and the dollar.
The bullish risk is just as clear. If inflation undershoots expectations, silver could squeeze higher from oversold conditions. But bulls still need to reclaim $61.40 before the chart looks repaired.
The next confirmation signal is not a catchy price target. It’s whether the inflation data weakens the Fed-hike story that knocked silver to seven-month lows in the first place.
Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.
The Bottom Line
- Silver’s drop shows how quickly inflation-hedge demand can reverse when rate-hike expectations rise.
- The upcoming PCE inflation report could drive the next major move in XAG/USD.
- A stronger US Dollar and higher Treasury yields remain key headwinds for non-yielding metals.
Originally published on XOOMAR. For more news and analysis, visit XOOMAR.
