Silver Price Forecast: XAG/USD Dips Below $36.20 Amid Bearish Reversal and U.S. Treasury Yields Rebound
By Christian Borjon Valencia | June 27, 2025
Silver prices faced downward pressure on Friday, retreating from a recent five-day high as the U.S. dollar and Treasury yields experienced a rebound. The XAG/USD pair, which measures silver priced in U.S. dollars, slipped below the $36.20 mark, following a bearish reversal that challenges the short-term bullish sentiment.
Technical Overview: Bearish Engulfing Pattern Signals Potential Pullback
Silver reached a peak of $36.83 during the trading session, approaching the psychologically significant $37.00 resistance level. However, by the time of writing, the price had dropped to approximately $36.16, retreating more than 1% ahead of the weekend. This movement was accompanied by the formation of a bearish engulfing candlestick pattern on the daily chart — an indicator that often signals a potential trend reversal to the downside.
Despite the pullback, technical analysts emphasize the importance of a weekly close above $36.00 to maintain a strong bullish structure. Holding above this support level could keep upward momentum alive, with buyers looking toward higher targets.
If bulls regain control and push prices above the June 26 peak of $36.83, the next immediate resistance zones include the near-term $37.00 level and the yearly high at $37.31. Conversely, a sustained move below $36.50 could prompt a test of the $36.00 support. A further drop would likely revisit the June 24 low at $35.68 and the latest cycle low at $35.29, which function as critical floor levels for silver prices.
Market Drivers: U.S. Dollar and Treasury Yields Influence Silver’s Trajectory
Silver’s price fluctuations remain tightly connected to movements in the U.S. dollar and Treasury yields. On Friday, a slight appreciation in the U.S. dollar index and rising yields on U.S. government bonds weighed on silver’s price. This inverse relationship is typical, as a stronger dollar makes dollar-denominated commodities like silver more expensive for holders of other currencies, thereby dampening demand.
Additionally, rising U.S. yields tend to make yieldless assets like silver less attractive compared to interest-bearing investments. This dynamic often results in downward pressure on precious metals amid improving bond market sentiment.
Understanding Silver’s Market Dynamics
Investor Appeal: Silver is considered a precious metal with intrinsic value, widely used as a store of wealth and a medium of exchange. It serves as a portfolio diversification tool and a hedge against inflationary pressures, though it typically sees more volatility than gold.
Price Influencers: A variety of factors influence silver prices, including geopolitical risks, macroeconomic recession fears, U.S. dollar strength or weakness, and global interest rate trends. Additionally, industrial demand plays a significant role since silver is utilized extensively in electronics, solar energy, and other manufacturing sectors due to its excellent conductivity.
Relationship With Gold: Silver prices tend to move in tandem with gold, both benefiting from safe-haven status during times of uncertainty. The gold-silver ratio is frequently monitored by investors to assess relative valuations between the two metals, which can affect investment flows.
Looking Ahead
Investors and traders keen on silver should watch for how the market closes this week in relation to the $36.00 level, as well as monitor developments in U.S. economic indicators that influence dollar and yield trends. Resuming an uptrend will require overcoming resistance at $36.83 and pushing towards $37 and beyond. Conversely, breaches below key support levels may point toward deeper corrections.
As always, market participants are urged to conduct thorough research and consider market risks before making investment decisions involving silver or any other commodities.
Disclaimer: The information presented herein is for informational purposes only and does not constitute financial advice. Investing in precious metals carries risks including potential loss of principal. Readers should consult with a licensed financial advisor before making investment decisions.