Silver prices remain firm, with XAG/USD trading around $80.80 per ounce, as investors weigh reflation optimism against unresolved geopolitical risks. Support has also come from a softer US dollar, which recently slipped to its weakest level since early February, improving the appeal of dollar-priced metals for international buyers.

The strength of this move lies in its broader context. Markets are reacting to Japan’s renewed commitment to fiscal expansion, a cautious but shifting stance from US Federal Reserve officials, and guarded optimism surrounding Middle East diplomacy. Together, these forces are reshaping how silver is being valued - not just as a defensive asset, but as a macro-sensitive metal tied to policy and growth expectations.

What’s driving Silver?

Silver’s recent momentum has been underpinned by changing global inflation expectations, sparked in part by political developments in Japan. The decisive election victory of Prime Minister Sanae Takaichi’s ruling coalition has strengthened expectations that fiscal stimulus will remain central to Japan’s economic strategy.

Markets view this outcome as supportive of sustained government spending, continued pressure on the yen, and higher long-term inflation assumptions. Historically, such reflationary conditions have favoured precious metals, particularly silver, which benefits from both its inflation-hedging characteristics and its industrial demand profile.

Alongside developments in Asia, traders are positioning ahead of key US labour market data. January’s non-farm payrolls report is expected to show job creation slowing to roughly 70,000, while unemployment is forecast to remain near 4.4%. These figures are seen as critical in shaping near-term expectations for US monetary policy.

Federal Reserve officials have maintained a measured tone. San Francisco Fed President Mary Daly recently suggested the labour market may be entering a phase of reduced hiring and layoffs, while Fed Governor Philip Jefferson reiterated that future policy decisions will depend on incoming data. This uncertainty has kept real yields in check, offering ongoing support to silver prices.

Why it matters

Silver’s ability to hold recent gains reflects a shift in how investors are assessing macro risk. Unlike gold, silver tends to perform best when inflation protection coincides with expectations of economic resilience. Japan’s reflationary stance reinforces that environment, while growing confidence around US rate cuts later in the year has capped upside in the dollar. Markets currently expect the first Fed cut in June, with another potentially following in September.

Market participants increasingly see silver as sensitive to policy divergence rather than isolated data points. As one metals strategist told Reuters, silver is responding more to structural trends - such as fiscal expansion in Asia and slower disinflation in the US - than to short-term headlines. That perspective helps explain why silver has remained firm even as geopolitical tensions show early signs of easing.

Impact on markets and traders

Price action in silver has also been reinforced by systematic trading activity. Recent volatility in precious metals has triggered increased participation from algorithmic and machine-learning-driven funds, particularly as correlations with real yields have tightened.

With the US dollar trading below its early-February lows, demand from non-US buyers has strengthened, helping to sustain upward pressure. This dynamic has kept pullbacks relatively shallow, as periods of weakness continue to attract fresh interest.

Bond market signals have added to the supportive backdrop. US Treasury Secretary Scott Bessent recently suggested the Federal Reserve is unlikely to accelerate balance-sheet reduction, even under potential changes in leadership. That viewpoint suggests looser liquidity conditions will persist longer than previously expected. Investors are also pricing at least two rate cuts in 2026, extending silver’s appeal beyond the near-term cycle.

Expert outlook

Looking ahead, silver’s next move will likely depend on confirmation from economic data rather than speculative positioning. A weaker-than-expected US jobs report could reinforce expectations of rate cuts and keep real yields subdued, a scenario that would favour further upside. Conversely, a renewed pickup in wage growth could revive inflation concerns and limit gains.

Geopolitical developments remain an important variable. While recent US–Iran talks in Oman have reduced immediate escalation risks, Iran’s refusal to halt uranium enrichment continues to cloud the outlook. US President Donald Trump has warned of severe consequences if negotiations fail, reinforcing the case for silver's safe-haven demand not having fully dissipated. For now, market behaviour suggests traders are more inclined to buy pullbacks than challenge the broader uptrend.

Key takeaway

Silver’s ability to stabilise near $80 reflects more than short-term momentum. Reflationary policy signals from Japan, a softer US dollar, and growing confidence in future rate cuts have combined to create a supportive macro environment. While geopolitical risks have eased marginally, they continue to underpin demand. The next catalyst will likely come from US labour data and clearer signals on the Federal Reserve’s easing timeline.

Silver price outlook

Silver has pulled back following a sharp upside extension, retreating from recent highs and settling closer to the midpoint of its broader trading range. Bollinger Bands remain widely stretched, signalling that volatility is still elevated even as price has moved back within the bands.

Momentum indicators point to a cooling phase. The RSI has eased toward the midline after previously reaching overbought territory, suggesting momentum has moderated rather than reversed. Trend strength, however, remains elevated, with ADX readings indicating the broader trend structure is still intact. Price also continues to trade well above prior consolidation areas near $57 and $46.93, highlighting the scale of the earlier advance.