Silver (XAG/USD) prices are under pressure this week, sliding for the third consecutive day as the US Dollar strengthens and US Treasury yields rise. The precious metal is trading near $36.40 on Wednesday, down from recent highs, and remains trapped in a narrow consolidation range.
Despite underlying geopolitical risks and safe-haven demand, silver’s upside is being curbed by resilient US economic data and Federal Reserve policy expectations. The latest article from Fimatron brings clarity to this subject through expert commentary and analysis.
XAG/USD Under Pressure: Key Technical Levels in Focus
The XAG/USD pair has slipped below the $36.50 level, marking a third straight daily decline. Price action remains range-bound, trading between $35.50 and $37.30, while staying inside a broader rising channel that began forming in early April.
Despite holding within a medium-term uptrend, silver is currently struggling to find bullish momentum, particularly as the 21-day Exponential Moving Average (EMA) near $36.19 comes into play as a key dynamic support level.
A confirmed break below the 21-day EMA would signal growing bearish pressure, potentially exposing $34.50, a key former resistance turned support. A deeper retracement may extend toward $33.50, which serves as a critical technical floor for the ongoing trend.
US Dollar Strength Weighs on Precious Metals
Silver’s downside is largely driven by a firming US Dollar, which continues to gain traction following recent economic data. Strong non-farm payroll (NFP) figures released last week reinforced the narrative that the Federal Reserve is unlikely to rush into interest rate cuts, especially with inflation still lingering above target.
As a non-yielding asset, silver tends to suffer when expectations of tighter monetary policy persist, since higher interest rates increase the opportunity cost of holding precious metals.
The US Dollar Index (DXY) has rebounded sharply, reflecting investor confidence in the relative strength of the US economy. Concurrently, US Treasury yields have moved higher, providing further headwinds for silver and other metals that compete with interest-bearing instruments for investor attention.
Geopolitical Tensions Add Complexity to Silver’s Outlook
While economic fundamentals have largely dictated silver’s near-term trajectory, geopolitical risks remain a supportive factor, offering some downside protection. The US President has recently announced a sweeping set of new trade tariffs, triggering renewed concerns about global economic stability. These include a 50% tariff on copper imports, a potential 200% tariff on pharmaceuticals, and a 10% blanket tariff targeting BRICS nations.
These developments have increased demand for safe-haven assets, with silver typically benefiting during periods of political and economic uncertainty. However, despite these elevated risks, silver has failed to capitalize, due to overriding macroeconomic constraints.
Investors remain cautious, balancing the safe-haven narrative with more dominant market forces such as US Dollar strength and delayed Fed easing. As such, silver’s performance has been relatively muted despite the rise in geopolitical uncertainty.
Momentum Indicators Suggest Consolidation
From a technical analysis perspective, silver’s momentum remains lackluster. The Relative Strength Index (RSI) is hovering near 56, pointing to a neutral-to-mildly bullish bias but lacking strong conviction. The Average Directional Index (ADX) at 12.50 reflects a weak trend, suggesting that traders are not committing heavily to either long or short positions.
Until silver breaks out decisively from the $35.50–$37.30 range, direction is likely to remain choppy. A move above $37.30, which coincides with a multi-year high, would mark a bullish breakout, potentially triggering a rally toward $38.00 and $39.00 in extension. Conversely, a break below $35.50 and the 21-day EMA would reinforce a bearish reversal, with the possibility of revisiting the $34.50 and $33.50 support zones.
Fed Policy, Trade Tariffs, and Economic Data in Focus
Looking ahead, silver’s direction will hinge on a mix of monetary policy signals, economic data releases, and geopolitical developments. With no major US economic releases scheduled for the remainder of the week, market participants are likely to focus on Fed commentary and unfolding trade policy narratives.
If the Federal Reserve maintains a hawkish tone, reaffirming its data-dependent approach to rate cuts, silver may remain capped despite safe-haven interest. Conversely, any signs of softening inflation or weaker-than-expected data could revive rate cut expectations, weakening the Dollar and potentially lifting silver prices.
Conclusion
The XAG/USD forecast remains cautious as silver continues to consolidate below its recent peaks. While a stronger US Dollar, rising yields, and hawkish Fed expectations dominate the landscape, safe-haven flows driven by geopolitical tensions offer limited downside support.
The 21-day EMA is now the key technical level to watch, with a break below likely triggering further weakness toward $34.50 and $33.50. However, a push above $37.30 could reignite bullish momentum toward $39.00, especially if the US economic backdrop begins to soften. Until then, range-bound trading remains the base case for XAG/USD.
