Silver Tries to Base as Inflation Eases Fed Hike Bets

Key Moments

Macro Drivers: PCE Data and Fed Expectations

Silver (XAG/USD) stabilized on Friday as the US Dollar (USD) and US Treasury yields pulled back following the latest US Personal Consumption Expenditures (PCE) inflation report, which indicated that underlying price pressures stayed relatively contained.

At the time of writing, XAG/USD is trading around $58.12 and is on track to close the month almost 20% lower, after touching a more than six-month low earlier in the week.

Data released on Thursday showed that headline PCE increased 0.4% month-on-month in May, unchanged from April but below the 0.5% consensus forecast. Core PCE remained at 0.3%, in line with expectations.

The softer monthly inflation readings helped halt the recent sharp decline in Silver as traders scaled back the likelihood of an imminent Federal Reserve rate increase. According to the CME FedWatch Tool, markets now assign a 61% probability to a September rate hike, down from 70% one week earlier.

Despite this repricing, Silver has not attracted strong follow-through buying interest. Annual inflation is still running well above the Fed’s 2% objective, underpinning expectations that monetary policy will stay restrictive for an extended period. That stance was reinforced by Chair Kevin Warsh, who emphasized the importance of restoring price stability at this month’s policy meeting.

Unless the market meaningfully reduces its expectations for additional Fed tightening, the bearish technical backdrop for Silver is likely to continue limiting the upside.

Technical Picture: Downtrend Intact Below Key Moving Averages

On the daily chart, XAG/USD remains entrenched in a bearish phase, trading below the 100-day Simple Moving Average (SMA) at $75.97 and the 200-day SMA at $69.56.

This configuration – with both major moving averages lying above spot prices – signals sustained downside pressure in the broader trend. The horizontal zone around $60.00 is acting as a nearby cap, adding to the overhead supply and restricting recovery attempts.

The Relative Strength Index (RSI) is holding in oversold territory near the 30 level, indicating that selling pressure has become stretched but has not yet produced a clear reversal signal. Meanwhile, the Average Directional Index (ADX) reading above 30 confirms that the prevailing downtrend remains robust.

Key Support and Resistance Levels for XAG/USD

Short-term technical levels for Silver are clustered across a wide range, defining the zones where buyers and sellers may become more active.

On the downside, the first notable support stands at $55.00, followed by a more important structural base near $50.00, where dip-buying interest could emerge to slow or halt the decline.

On the topside, initial resistance is located at $60.00. A sustained move above that area would then bring the 200-day SMA at $69.56 and the $70.00 horizontal ceiling into focus, together forming a broader supply band. Higher up, the 100-day SMA at $75.97 and subsequent resistance levels at $80.00 and $90.00 outline progressively stronger hurdles that XAG/USD would need to clear to meaningfully ease the existing bearish bias.