Silver price forecast: XAG/USD jumps 3% amid dovish Fed and geopolitical tensions

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Highlights

Silver holds above $78 as geopolitical risks and dovish Fed outlook fuel safe-haven demand
Weaker dollar and soft ISM PMI reinforce expectations for further Fed rate cuts
Bullish technical structure keeps silver supported above $77 ahead of potential upside

A combination of dovish monetary expectations and rising geopolitical tensions is creating an environment favourable to silver bulls. U.S. military operations in Venezuela, renewed hostilities involving Saudi Arabia and the UAE, continued unrest in Iran, and the ongoing Russia-Ukraine conflict are driving investors toward defensive assets. This flight to safety is being amplified by expectations of looser monetary policy in the United States.

Silver price dynamics (Nov 2025 - Jan 2026). Source: Tradingview

Market participants have scaled back their dollar bets as the Federal Reserve outlook turns increasingly dovish. This has pushed the dollar lower from recent multi-week highs, reinforcing the bullish trend in silver. Monday’s release of U.S. ISM Manufacturing PMI, which printed at 47.9 against a forecast of 48.3, confirmed continued contraction in the industrial sector and heightened expectations of further rate cuts from the Fed. These expectations are now supporting asset classes that typically benefit from lower yields, including precious metals.

Silver upside favoured as technical support aligns with strong macro backdrop

Technically, silver’s price action remains constructive following the breakout above key resistance levels earlier in the week. The 1-hour 20 EMA is currently sitting near $77 and has acted as a key support during both Monday’s rally and the Asian session breakout on Tuesday. This moving average is well-positioned to serve as a springboard for further upside should bullish momentum resume in the U.S. session. Additional support is seen at the 1-hour 100 EMA, which is tracking around $75.

Looking forward, the fundamental backdrop suggests more room for silver’s rally to extend. If bullish momentum resumes, price may attempt to retest the $84 level, which marked the recent multi-decade high in December. The confluence of weaker dollar conditions, geopolitical stress, and a supportive technical structure continues to favour further upside in silver.

In recent analysis, we discussed how silver jumped 5% to $76 as Venezuela tensions triggered a safe-haven demand spike. The $70–$78 range held firm while traders watched the Venezuela crisis and PMI data for breakout confirmation.

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