Silver prices trimmed gains after a recent rally, but XAG/USD continues to trade above a key support zone, keeping its recovery prospects alive. Investors are closely monitoring the market ahead of the upcoming U.S. Consumer Price Index (CPI) release, which is likely to influence expectations for Federal Reserve policy adjustments.
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AAPLSilver pulls back before pivotal U.S. inflation data
Spot silver dipped 1.7% to $64.64 per ounce on Tuesday, following a 2.3% advance to $65.03 the previous day. The price movement reflects cautious trading ahead of Wednesday’s July CPI report from the Bureau of Labor Statistics, a significant market catalyst for precious metals.
Recent inflation figures showed a 0.4% decline in June from the previous month, with annual inflation reported at 3.5%. Core CPI, which excludes food and energy, remained flat over the month and increased 2.6% year-on-year. Analysts believe that gentle inflation readings would support silver by reducing pressure on the dollar and lowering expectations for tighter monetary policy. Conversely, a higher-than-expected CPI could weigh on silver’s recent gains.
Technical levels: $63 support and $67 resistance in focus
Technical analysis of the four-hour XAG/USD chart reveals that silver has stabilized above the $63 price level after recovering from July’s downturn. At the time of analysis, silver was trading just above $64.60, with initial support noted at $63.34 and $63.02 per ounce.
Maintaining support around $63 is viewed as essential for the short-term bullish trend. The next key resistance appears at $67.15. If silver achieves and closes above this threshold on the four-hour chart, upside momentum could extend toward $71.56, and potentially reach $77.10 if the rally intensifies.
Should silver fall below $63, the short-term rebound would likely lose strength, raising the risk of revisiting lower support levels. A significant support zone is identified at $54.80 per ounce, which would challenge the broader bullish outlook if breached.
| Level | Support | Resistance |
|---|---|---|
| Immediate | $63.34, $63.02 | $67.15 |
| Major | $54.80 | $71.56, $77.10 |
Should silver manage to hold above $63, it maintains a bullish technical structure, while breaking above $67.15 would put higher price targets into play.
Citi’s $70 target and supply deficit outlook
Citigroup, a multinational investment banking corporation, recently increased its near-term silver price forecast to $70 per ounce over the next three months, up from $60 in June. With the current spot price around $64.64, an advance to $70 would represent approximately 8% further upside.
On the supply side, the Silver Institute projects a sixth consecutive annual deficit in 2026, with an anticipated market shortfall of 67 million ounces. Physical investment demand is also estimated to rise by 20% to 227 million ounces. While a persistent deficit does not ensure higher prices, it highlights the ongoing reliance on existing inventories to meet demand.
Mini dictionary: The Silver Institute is a nonprofit international association that provides industry research, statistics, and market analysis on silver supply and demand trends worldwide.
Gold-to-silver ratio and potential market impact
The gold-to-silver ratio, currently around 67, is drawing attention from analysts. Rashad Hajiyev, a market strategist, notes that the ratio remains within what he interprets as a bearish ascending wedge on technical charts. Should the ratio break lower, silver could outperform gold, assuming both metals remain supported by fundamentals.
Hajiyev’s analysis suggests that if gold were trading at $4,800 and the gold-to-silver ratio slipped to 48, silver would be priced close to $100 per ounce. However, this is only a hypothetical scenario, not an explicit forecast.
Mini dictionary: The gold-to-silver ratio measures how many ounces of silver are required to buy one ounce of gold. It is often used to assess whether silver is undervalued or overvalued relative to gold over time.
A recent study from the Silver Institute showed that the gold-to-silver ratio has trended toward a long-term equilibrium of just below 60:1 since 1970. This mean-reverting tendency is cited as a key market dynamic by some analysts.
Silver’s near-term outlook is cautiously bullish as long as XAG/USD stays above $63. A sustained move above $67.15 would bring Citi’s $70 forecast and the $71.56 resistance level into focus, while a drop below $63 may signal a fading recovery.
