-
Silver retreats below $38.50 as bullish momentum stalls near its year-to-date high.
-
A stronger US Dollar and persistent inflation reflected in CPI data push yields higher, pressuring Silver prices.
-
Solid industrial output from China and the Eurozone helps cushion downside risks for XAG/USD.
Silver (XAG/USD) is attempting a modest recovery on Tuesday after sliding from a fresh year-to-date high, as investors digest a wave of key economic data from China, the Eurozone, and the United States.
The pullback follows a sharp rally that saw Silver hit $39.13 in the previous session — its highest level of 2024 — before profit-taking sent the metal back toward the $38.00 psychological threshold.
At the time of writing, XAG/USD continues to trade within a well-defined ascending channel, with price action highly sensitive to shifts in risk sentiment and the near-term direction of the US Dollar.
US Dollar Strength Caps Silver Gains Following CPI and Yield Reaction
Silver’s upside has been limited by renewed strength in the US Dollar, as the June Consumer Price Index (CPI) report reinforced expectations that the Federal Reserve may delay rate cuts. Headline inflation rose 2.7% year-over-year, in line with forecasts, while core CPI came in at 2.9%, just below the 3.0% consensus but still notably above the Fed’s 2% target.
The slower-than-hoped disinflation pace led markets to trim the odds of a September rate cut. Fed funds futures now price in a 59% chance of a cut, slightly down from pre-release levels. As Treasury yields edged higher, the US Dollar gained ground, weighing on non-yielding assets like Silver. The Greenback’s relative strength reflects continued resilience in the US economy, which remains more robust compared to many global peers.
Global Industrial Strength Offers Support for Silver Prices
Despite the pressure from a stronger USD, downside in Silver has been cushioned by solid industrial data out of China and the Eurozone. In Asia, China’s Q2 GDP grew by 5.2% year-over-year — slightly above expectations — while quarterly growth reached 1.1%, beating the 0.9% forecast. More critically for Silver, industrial production surged 6.8% YoY, up from 5.8%, pointing to strong demand in manufacturing and factory output.
Given Silver’s broad industrial applications — particularly in electronics, solar energy, and heavy manufacturing — improving production trends support its physical demand outlook.
Meanwhile, Eurozone industrial output delivered a bullish surprise in May, rising 1.7% month-over-month and 3.7% year-over-year, significantly outperforming expectations. The recovery from April’s decline signals renewed strength in the European manufacturing sector, further boosting the demand narrative for Silver.
Technical Outlook: Silver Pulls Back But Holds Rising Channel
Silver’s rally stalled after reaching a YTD peak at $39.13 on Monday, triggering a wave of profit-taking that pushed prices below $38.50. As of Tuesday, XAG/USD is hovering near the $38.00 mark, trading within a rising channel visible on the 4-hour chart.
Key support lies at $38.00, followed by the 50-period Simple Moving Average (SMA) near $37.23. If selling pressure intensifies, the next major support zone is seen around $36.50. On the upside, resistance remains at the $39.13 high, with a break above potentially opening the path toward new multi-year highs.
The Relative Strength Index (RSI) has eased to 58, indicating cooling bullish momentum but staying above neutral territory. While not yet signaling oversold conditions, the loss of momentum suggests that bulls need to reclaim ground above $38.50 to regain control. Otherwise, Silver may face further consolidation or a short-term pullback before the uptrend resumes.
Overall, as long as XAG/USD remains within the ascending channel and global industrial demand stays robust, dips are likely to be viewed as buying opportunities by longer-term bulls.
Silver 4-hour chart
