Silver (XAG/USD) Price: Down 1.5% as Trendline Break Hints at Deeper Correction

[Ben Graham]

Most Read: Amazon (AMZN) Earnings: Growth Drivers, AI Investments, and Market Outlook

Silver prices have fallen around 4.5% over the last two trading days as a resurgent US Dollar and weaker haven flows weigh on prices.

The US Dollar remains strong, and rising US bond yields are limiting any chance of recovery for now. The Dollar’s strength is driven by hawkish comments from Fed Chair Jerome Powell, along with strong US GDP and job data. These factors support the Federal Reserve’s cautious stance on monetary policy and reduce expectations for rate cuts in the near future.

Now Silver's extended rally this year was down to a combination of factors. Those include safe haven demand, a weak US Dollar and supply demand discrepancies.

Now if haven demand remains low and the US Dollar rally continues, how deep could the pullback in silver prices be? For the record, the discrepancy between supply and demand remains in play and is highly unlikely to change anytime soon.

With that in mind and only one of the three main causes of the silver rally still present, what could the potential downside for silver be?

Technical Analysis - Silver (XAG/USD)

From a technical standpoint, Silver has peaked at 39.52 before falling. A brief attempt at a recovery on Monday and Tuesday has faded away thanks to Fed Chair Powell's comments yesterday.

A daily candle closed yesterday below the ascending trendline with further losses today.

The RSI period-14 on the daily chart has crossed below the 50 neutral level but remains some way off oversold conditions.

This means that further downside toward the 100-day MA at 34.60 could materialize.

Silver (XAG/USD) Daily Chart, July 31, 2025

Source: TradingView.com (click to enlarge)

Dropping down to the four-hour chart and the picture changes slightly.

The period-14 RSI is deep in oversold territory with a potential short-term pullback a real possibility.

Looking toward the upside, resistance is provided by the 200-day MA at 37.24 and the 100-day MA at 38.09.

A four-hour candle close above the 38.22 handle would invalidate a potential bearish setup in the near-term.

Silver (XAG/USD) Four-Hour Chart, July 31, 2025

Source: TradingView.com (click to enlarge)

Support

• 36.20
• 35.26
• 34.60 (100-day MA)

Resistance

• 37.24
• 38.09
• 38.68

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.