Silver Price Forecast: XAG/USD retreats from $28 amid uncertainty ahead of US core PCE Inflation

Silver price exhibits weakness with investors focusing on the US core PCE inflation for June.
The Fed is expected to start reducing interest rates from the September meeting.
China’s dismal economic outlook has dampened Silver’s demand as an industrial metal.

Sagar Dua FXStreet

Silver price (XAG/USD) falls back after a short-lived pullback move to near $28.00 in Friday’s European session. The white metal remains in the bearish trajectory amid uncertainty over its demand as an industry metal globally.

The lackluster outcome of China’s Third Plenum, its weaker-than-expected Q2 Gross Domestic Product (GDP) growth, and an unexpected rate-cut decision by the People’s Bank of China (PBoC) have pointed to a slowdown in the world’s second-largest nation. This has raised concerns over the scale of business investment and consumer spending. Silver as a metal has applications in various industries such as renewable energy, electric vehicles (EVs), and electrical appliances etc.

Meanwhile, the uncertainty among investors ahead of the United States (US) core Personal Consumption Expenditure price index (PCE) data for May, which will be published at 12:30 GMT, has kept the Silver price on the backfoot.

The core PCE inflation data, a Federal Reserve’s (Fed) preferred inflation measure, is estimated to have decelerated to 2.5% from May’s reading of 2.8% year-on-year, with monthly price pressures growing steadily by 0.1%. The underlying inflation data will influence market expectations for rate cuts, which investors expect that the Federal Reserve (Fed) will start reducing in September.

Silver technical analysis

Silver price weakens after a breakdown below the horizontal support plotted from June 26 low at $28.57 on a daily timeframe. The near-term outlook of the Silver price appears to be uncertain as the 20- and 50-day Exponential Moving Averages (EMAs) are on the verge of delivering a bearish crossover near $29.50. On the downside, the asset will find support near May 2 low at $26.00.

The 14-day Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, suggesting that a bearish momentum has been active.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD stuck as the RBA talks tough into a slowdown

The Australian Dollar is going nowhere in a hurry, and the contradiction at its core explains why. The Reserve Bank of Australia keeps dangling the prospect of another hike, yet the economy it governs just expanded 0.3% in the first quarter, a clear step down from the prior pace. A central bank threatening to tighten into a visible slowdown is not a recipe for conviction in either direction, and the tape shows it.

USD/JPY: Japanese Yen coiled at the line, leaning on everyone but Japan

The Yen is doing very little, and that stasis is the whole story. USD/JPY sits glued near 160.00 not because Japan has found new strength, but because two outside forces are fighting to a draw over it: a US rate complex that keeps the dollar bid, and a Ministry of Finance that refuses to let the line break.

Gold declines below $4,500 on stalled US-Iran ceasefire talks, US NFP data looms

Gold price edges lower to near $4,470 during the early Asian session on Friday. The precious metal remains volatile amid ongoing geopolitical turmoil. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US May employment report later on Friday.

Bitcoin falls below $64K as demand turns negative, short-term holders' selling intensifies

Bitcoin has fallen below $64,000 on Thursday amid weakening market demand and mounting selling pressure from short-term holders. The leading cryptocurrency slipped toward the $63,000 level amid a broader risk-off environment, with several key metrics signaling one of the most challenging periods of the current market cycle.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.