Silver Price Nears $33.12: Will It Breakout or Break Down?

Silver (XAG/USD) is hanging tight around $33.12, caught in a classic tug-of-war between bulls and bears. Since mid-May, the price action has been coiling within an ascending trendline, with resistance looming at $33.50 and support holding at $32.98. This tightening range suggests that a breakout—or breakdown—might be just around the corner.

While much of the market’s attention is focused on the U.S. dollar’s strength and gold’s moves, silver’s trajectory is closely tied to inflation expectations. Traders are eagerly awaiting the U.S. personal consumption expenditures (PCE) price index report, a key inflation gauge for the Federal Reserve. According to Reuters polls, PCE inflation is expected to hold steady at 0.1% month-on-month, with a 2.2% year-on-year increase.

Recently, San Francisco Fed President Mary Daly hinted at the possibility of rate cuts later this year, but her cautious tone suggests the Fed might hold rates steady for now. This hawkish stance is capping the upside for precious metals like silver, as higher interest rates tend to dampen demand for non-yielding assets.

Silver (XAG) Technical Setup: Volatility Brewing Beneath the Surface

Silver’s recent price action reflects a market on edge. Spinning tops and long wicks on the candlesticks signal indecision, while the 50-day EMA at $33.19 acts as a resistance barrier, stalling upward momentum.

Key levels to watch:

• Resistance: $33.50, $33.85, $34.17

• Support: $32.98, $32.71, $32.45

If silver breaks firmly above $33.50, it could open the door to $33.85 or even $34.17. On the flip side, a drop below $32.98 could send prices slipping to $32.71 or $32.45. The coiling pattern on the chart suggests that volatility is brewing, so traders should wait for a decisive breakout or breakdown before committing to a trade.

Trade Tensions, Tariffs, and Silver’s Next Move

Adding to the mix, a federal appeals court has briefly reinstated former President Trump’s tariffs, injecting fresh uncertainty into global trade. Talks with China are still stalled, and U.S. Treasury Secretary Scott Bessent hinted that a direct meeting between Trump and Xi Jinping might be necessary to break the deadlock.

This blend of geopolitical tensions and cautious Fed policy is keeping silver traders on edge. With inflation data on the horizon and trade uncertainties piling up, silver’s price action could become even more erratic. A decisive move in either direction might set the tone for the next trend.