Silver price forecast weakens as XAG/USD falls near $35.50 with traders booking profits after a recent rally in the precious metals market. The grey metal loses momentum during early Friday trading in Europe as investors liquidate positions to offset losses in risk assets amid a broader market recalibration. The recent pullback in silver prices highlights tactical market responses to changing global economic trends and geopolitical developments.
Safe-Haven Demand Declines Amid US-Iran Diplomatic Pause
The demand for safe-haven metals, including silver, has subsided as reports indicate easing US rhetoric toward Iran. US President Donald Trump has reportedly delayed any final decision on military strikes for two weeks, offering Iran a last chance to negotiate on its nuclear program. This development softens immediate geopolitical risk, limiting safe-haven flows into precious metals. As a result, the silver price forecast now reflects limited upside near-term, as market sentiment turns moderately risk-on.
Federal Reserve Holds Rates Steady, Signals Policy Uncertainty
The US Federal Reserve has maintained its key interest rate at 4.5% in June, as expected. Fed Chair Jerome Powell stressed ongoing policy uncertainty and inflation risks, implying that rate hikes are not off the table. This environment supports elevated yields, often putting pressure on non-yield-bearing assets such as silver. As investors shift capital into higher-yield instruments, the silver market pullback appears aligned with broader monetary policy trends. This contributes to the cautious silver price forecast for short-term movement.
China Keeps Loan Prime Rates Steady, Impacting Silver Demand
On Friday, the People’s Bank of China kept its Loan Prime Rates unchanged, with the one-year rate steady at 3.00% and the five-year at 3.50%.These rates affect industrial borrowing costs in China, which is one of the world’s top consumers of silver for electronics, solar technology, and automotive manufacturing. The stable yet elevated borrowing environment could temper industrial demand, adding downward pressure on silver price forecast models.
Also Read: Gold Price Outlook: Bulls Falter as Hawkish Fed Lifts the Greenback
Market Sentiment Recovers, Risk Appetite Returns
Global investors appear more optimistic as tensions between Israel and Iran show no signs of immediate escalation. The absence of major negative headlines has bolstered risk appetite across equity and commodity markets. Consequently, the need for defensive positioning in precious metals declines. This shift is reflected in the ongoing silver market pullback and supports the broader trend of profit booking in silver.
Industrial Demand Outlook Adds Complexity to Silver Pricing
Despite a decline in safe-haven demand, silver continues to gain from consistent long-term industrial use across multiple sectors. The metal’s use in clean energy, electronics, and medical devices underpins a strong structural case. However, short-term fluctuations in interest rates, geopolitical sentiment, and currency dynamics will continue to shape the silver price forecast. As central banks maintain a cautious stance, industrial recovery trends in economies like China and the US remain key.
Technical Indicators Suggest Short-Term Weakness in XAG/USD
From a technical perspective, silver faces resistance above $36.00, with support seen around the $35.20 level. The recent decline marks the third consecutive session of losses, indicating bearish momentum. Technical analysts observe that XAG/USD could remain under pressure unless fresh demand emerges or safe-haven flows return. The silver market pullback suggests cautious positioning until a new catalyst shifts the current narrative.
Conclusion: Volatility Expected as Macro Factors Interact
In conclusion, the silver price forecast remains sensitive to a mix of geopolitical headlines, central bank actions, and investor sentiment. While the current XAG/USD dips stem from profit booking and reduced safe-haven flows, underlying industrial demand provides a floor. Traders should monitor developments in US-Iran relations, Fed policy shifts, and Chinese economic signals closely. As volatility persists, silver will continue to reflect a complex balance of macroeconomic drivers and technical cues.
