Silver (XAG) Forecast: Silver Bounces Amid Dollar Weakness as Traders Await Core PCE Data for Direction
By James Hyerczyk | Updated: June 26, 2025, 16:24 GMT+00:00
Silver prices have shown signs of resilience this week, maintaining a firm footing above a key technical pivot point despite a mixed macroeconomic landscape. As gold prices faltered and the U.S. dollar weakened to multi-year lows, traders are increasingly focused on upcoming U.S. inflation data—particularly the core Personal Consumption Expenditures (PCE) index—to clarify the metals market outlook and Fed policy trajectory.
Silver Holds Above $36.30 Pivot amid Market Uncertainty
On Thursday, silver (XAG/USD) edged higher, finding support at the $36.30 level following a rebound from Tuesday’s session low of $35.28. The metal has been trading within a tight range narrowed between resistance at $37.32 and firm technical support from previous highs near $35.40 to $34.87. This consolidation reflects traders’ caution as the broader precious metals complex responds to conflicting signals. While gold has shown weakness, silver’s relative strength is buoyed by a softening U.S. dollar and shifting safe-haven flows.
Gold Slips on Sticky Inflation and Fed Caution
Gold (XAU/USD), often a closely correlated barometer for silver, retreated after earlier gains, dropping below its 50-day moving average of $3,325.10. The pullback coincided with robust U.S. durable goods orders rising 16.4%, led by transportation, reinforcing concerns over persistent inflationary pressures.
Crucially, the latest inflation data showed the PCE inflation running hot at 3.7%, with core PCE—a Fed-favored inflation gauge—rising to 3.5%. This stubborn inflation figure dampens expectations for imminent Federal Reserve rate cuts despite a 0.5% contraction in first-quarter GDP.
Federal Reserve Chair Jerome Powell has maintained a cautious, wait-and-see stance, emphasizing the need to observe further data before adjusting policy. As a result, market pricing currently favors a potential rate cut in September, but persistent inflation and real yields remain headwinds for gold’s near-term rally.
U.S. Dollar Index Slides to Lowest Levels Since Early 2022
The dynamics underpinning metals prices are closely tied to movements in the U.S. dollar. The U.S. Dollar Index (DXY) breached critical support around 97.621, plummeting to levels unseen since early 2022. This slide has been amplified by political uncertainty, including reports that former President Donald Trump may seek to replace Fed Chair Powell, stirring doubts over the central bank’s credibility.
Consequently, the euro surged to a three-year peak at $1.1708, while the dollar weakened to a decade-low against the Swiss franc at 0.8007. The DXY remains entrenched below its 50-day moving average of 99.4, and bearish momentum endures amid the U.S. economic contraction and rising insured unemployment.
What This Means for Silver: A Constructive Technical Setup
Silver’s ability to hold above $36.30 amid a retreat in gold and a depreciating dollar suggests improving technical conditions. The weakening dollar acts as a significant tailwind, enhancing silver’s appeal, especially as safe-haven demand appears to be rotating from gold to silver.
A sustained break above the $36.30 pivot opens the possibility for silver to retest the multi-year high resistance at $37.32. However, failure to maintain this support zone could expose the metal to further downside pressure toward the $35.40–$34.87 support range.
Investors and traders are closely monitoring momentum indicators and price divergences between silver and gold to gauge underlying market sentiment during this volatile period.
Market Outlook: Bullish Bias Above $36.30, Eyeing Key Inflation Data
As long as silver prices stay above the critical $36.30 level, the short-term outlook remains constructive. Despite prevailing headwinds from the dollar and equity market strength, silver’s resilience reflects underlying support and the metal’s nuanced role amid shifting macroeconomic and geopolitical uncertainties.
The upcoming Core PCE inflation report is pivotal, as it will provide further clarity on inflation trends and the Fed’s future policy moves—both of which are central to determining silver’s price direction.
About the Author
James Hyerczyk is a seasoned U.S.-based technical analyst and market educator with over 40 years of experience. Specializing in chart patterns and price movements across futures and stock markets, he is the author of two books on technical analysis.
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Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult financial advisors before making any investment decisions.