Silver Price Rally Pauses As Traders Weigh Dovish Fed Bets

The silver price consolidates around $87 after its rally from the low of $76. The white metal pauses, weighing the broader fundamentals that could lead the price back toward a two-month-long advance above $90.00. The key driver for this pause is that traders priced out the expectations of an interest rate cut by the Federal Reserve this year.

The CME FedWatch tool shows that the odds of the Fed delivering an interest rate cut are just 1%. On the other hand, the possibility of holding them steady is 66.8%, while rising is 32.2%. Especially after the US consumer price index was released on Tuesday, traders pared dovishness from the Fed. The data showed that the inflation accelerated to 3.8% year-on-year (YOY) in April from the previous reading of 3.3%.

Apart from that, investors are closely focused on a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. At the start of a two-day summit on Thursday, Xi Jinping of China told Trump that trade talks were making progress, but disagreement over Taiwan could damage relations and even lead to conflict.

Silver Institute’s Silver Outlook 2026:

• Total demand is forecast to be down slightly by 2 percent to 1.11 Boz this year. Jewelry and silverware are expected to post double-digit losses as the impact of higher prices continues.
• Demand from industry is forecast to drop 3 percent, driven mainly by a continued and more marked slowdown in the uptake of PV.
• The impact of some of these losses will be tempered by expectations of an 18% increase in demand for coins and net bars.
• The survey said, “We are still constructive on silver, looking forward for the balance of 2026. “Policy uncertainty is still at unusually high levels, and sovereign debt fears are, if anything, intensifying given the fiscal pressures associated with the war, and worries about the future role of the US currency also remain relevant.
• The short-term outlook is clouded by the Iran war, but in our view, the longer-term case for precious metals is strengthened overall. “Our base case is that the situation will be contained and that the recent pressure exerted by rising US rate expectations on precious metals prices will be temporary.

Silver Price Technical Outlook:

The XAGUSD 4-hour chart reflects a strong bullish recovery phase after silver prices rebounded sharply from the May lows near the 72.00 region. The recent rally accelerated once the price broke above the 76.50 and 79.75 resistance zones. This breakout confirmed the shift in short-term structure from consolidation to upward momentum.

Since the breakout, the buyers have remained in control, driving prices toward the key resistance area around 88.97. For now, the technicals are supporting the bullish outlook. The blue moving average has crossed above the red one in the short term, with price action still trading comfortably above the green moving average in the long term.

This alignment typically implies a continued bullish momentum and a strengthening trend. A bullish crossover marker on the chart also supports the continuation of the upward trend. But the rally is showing some early signs of running out of steam near resistance. Silver has struggled to break out decisively above the 88.97 level where sellers have begun to show up.

At the same time, the RSI indicator has eased lower after falling into the near-overbought territory, indicating bullish momentum is cooling down a bit after the aggressive upside move. RSI remains above the neutral 50 level, but the indicator is suggesting a possible short-term consolidation pullback before the next leg in the market unfolds.

Bulls will want to see the 84.36-86.00 region hold up as support. Hold above this region with a possible further attempt towards 88.97, and major resistance near 96.03 will keep the broader bullish structure intact. On the downside, a break below 84.36 could trigger profit-taking and leave silver exposed to a deeper correction to 79.75.