Silver (XAG) Forecast: Next Silver Rally Needs a Catalyst as $35.40 Sets the Tone

Fed Rate Cut Hopes Keep Silver in Check

Silver (XAG/USD) closed last week nearly flat at $35.99, holding most of its strong gains this year but struggling to push higher. Traders are weighing strong industrial demand and a weaker dollar against Federal Reserve signals that rate cuts may take longer than many hoped.

Fed Policy Signals Still Mixed

The Fed kept rates steady at 4.25%-4.50% in June and warned about “difficult tradeoffs” with inflation still above target. Markets now see a 76% chance of a rate cut in September, with only a slim chance for July. High real interest rates continue to limit silver’s upside, as traders wait for clear signs the Fed is ready to ease.

Dollar Weakness Meets Trade Tensions

While the dollar (DXY) gained slightly last week, it’s still down 2.6% in a month and 8% over the past year, which is generally supportive for silver. However, Trump’s sudden end to Canada trade talks and talk of new tariffs are creating policy risks that have kept silver from breaking out. Traders are watching if the dollar’s longer-term weakness can finally translate into steady silver buying.

Industrial Demand Keeps Floor Under Prices

Silver’s use in solar, EVs, and electronics remains strong, with fabrication demand on track to top 700 million ounces this year. The silver market remains in its fifth year of a supply deficit despite a rise in recycling, giving the metal a solid floor even during slow weeks. Industrial demand is one reason silver continues to hold up better than many other commodities.

Will Jobs Data Trigger a Breakout?

This week’s focus is Thursday’s U.S. jobs report, which could give silver its next push. Weak jobs data could speed up Fed rate cut expectations and support silver prices.

Strong data may keep silver in its current range. Traders should also watch ISM manufacturing data and Tesla delivery numbers for clues on industrial demand, while Trump’s tariff plans will continue to influence dollar moves and risk appetite.

Trade-Ready Outlook

Silver has strong backing from steady industrial demand and ongoing supply deficits. If U.S. jobs data comes in soft, silver could get the fuel needed for a move higher.

A strong report may delay that breakout but is unlikely to knock silver much lower given strong demand trends and a weaker dollar backdrop. Traders should prepare for potential price spikes tied to economic data this week while staying aware of the Fed’s next move.

Technically, the key level to watch is $35.40. It has been tested successfully for three straight weeks. If it fails then look for an acceleration into a 50% level at $32.81. This would be a normal correction. The long-term uptrend is being controlled by the 52-week moving average at $31.65.

Crossing to the strong side of the long-term pivot at $37.51 would put silver in an extremely bullish position and open the door for an eventual test of the multi-year top at $44.22.

More Information in our Economic Calendar.