Silver (XAG) Forecast: 50-Day MA Breakout Fuels Rally on Weak Dollar News

Silver Surges as Dollar Weakens and Treasury Yields Flash Warning Signs

Silver prices are attempting to continue yesterday’s rally on Wednesday, drawing strength from a faltering U.S. dollar and renewed fiscal anxieties in Washington. With the metal trading firmly above its 50-day moving average, momentum has shifted to the upside. Traders are closely eyeing resistance levels at $33.25 and $33.70, which, if cleared, could open the path to a higher target zone between $34.59 and $34.87.

At 11:58 GMT, XAG/USD is trading $33.09, unchanged.

Dollar Drop Post-Moody’s Downgrade Spurs Precious Metals Bid

The greenback’s two-week slide is playing a central role in silver’s recent upside. Moody’s downgrade of U.S. credit last Friday—citing ballooning deficits from President Trump’s tax plan—triggered fresh selling in the dollar. This drop has enhanced the appeal of dollar-denominated assets like silver to foreign buyers. The dollar index (.DXY) is down across the board, falling to 144.095 yen and slipping 0.7% against the Swiss franc.

Currency traders are now watching U.S.-Japan finance discussions, especially with Treasury Secretary Scott Bessent scheduled to meet his Japanese counterpart. Any signals promoting a weaker dollar could give further lift to silver prices, particularly as gold—the broader bellwether for precious metals—trades near breakout levels.

Rising Yields Underscore Fiscal Alarm Bells

Treasury markets continue to reflect unease over U.S. fiscal health. The 30-year yield surged past 5% while the 10-year yield climbed to 4.5% on Wednesday. These moves follow growing expectations that the Trump administration’s tax legislation could balloon the deficit by up to $5 trillion. Deutsche Bank analysts flagged the tax bill’s final shape as pivotal to near-term debt expectations.

Bridgewater’s Ray Dalio echoed those concerns, warning that the real risk isn’t default but inflation—should the Fed resort to money printing to manage debt. These fears are pushing investors toward inflation-hedging assets like silver and gold.

Technical Picture Points to Upside Breakout Potential

From a technical standpoint, silver has broken above the 50-day moving average at $32.80—now acting as key support for the intermediate trend. Longer-term direction is governed by the 200-day moving average at $31.39. With prices now eyeing resistance at $33.25 and $33.70, traders are watching closely for a potential breakout that could accelerate a move toward the $34.59–$34.87 range.

Silver Forecast: Dollar Weakness and Deficit Anxiety Support Bullish Case

The convergence of a weakening dollar, surging Treasury yields, and expanding deficit risks supports a bullish case for silver. With gold also testing resistance and safe-haven demand elevated, silver’s breakout potential is gaining traction. A confirmed move above $33.70 could extend the rally toward the next key zone near $34.87. As long as the dollar remains soft and fiscal risks remain front and center, silver appears well-positioned for additional upside.

More Information in our Economic Calendar.