Silver Price Forecast Summary
Date: July 7, 2025
Author: James Hyerczyk
Overview
Silver prices are currently under pressure as they test a critical support level at $36.30. This comes after a recent rally that saw prices reach a 13-year high of $37.32 on June 18, 2025. The decline in silver prices is attributed to profit-taking by traders and concerns regarding Federal Reserve policy and dollar strength.
Current Market Conditions
As of 12:00 GMT, silver (XAG/USD) is trading at $36.24, down 1.88% from previous levels. The market is experiencing a pullback, with analysts warning that a break below the $36.30 pivot could lead to further declines towards the support zone between $35.40 and $34.87. The intermediate trend remains supported by the 50-day moving average at $34.50 and the 200-day moving average at $32.40, indicating a potential "buy the dip" strategy among traders.
Factors Influencing Silver Prices
Federal Reserve Policy
The Federal Reserve's recent hawkish stance, bolstered by strong employment data, has diminished expectations for rate cuts in July. This shift in policy is seen as a headwind for precious metals, including silver. Analysts from ClearBridge Investments have noted that the solid June jobs report has effectively closed the door on potential rate cuts.
Dollar Strength
The U.S. dollar has strengthened by 0.4% against other currencies, making silver more expensive for international buyers and adding further selling pressure. WisdomTree's Nitesh Shah has pointed out that the strong U.S. economic data reduces the immediate need for rate cuts, contributing to the dollar's strength.
Physical Demand Concerns
Similar to gold, silver is facing concerns regarding physical demand as high prices are impacting both industrial and investment demand. HSBC's James Steel has indicated that underlying physical demand is decreasing due to elevated prices, while Kitco's Jim Wycoff has highlighted profit-taking and a firmer dollar index as bearish influences.
Market Outlook
The technical setup for silver suggests that traders are waiting for deeper pullbacks before re-engaging in the market. While the intermediate uptrend remains intact above key moving averages, the inability to sustain prices above the 13-year high indicates potential exhaustion at current levels. The upcoming implementation of tariffs by Trump and potential penalties from BRICS nations add to the policy uncertainty, while strong economic data continues to diminish the safe-haven appeal of precious metals.
A break below the $36.30 level could lead to a decline towards the $35.40-$34.87 support zone, where value buyers may emerge, given the strong intermediate trend structure.
Conclusion
Silver is currently at a critical juncture, with various factors influencing its price trajectory. Traders are advised to monitor the $36.30 support level closely, as its failure could signal further declines, while a rebound could attract value buyers looking for opportunities in the market.