Silver, Gold Forecast. XAG/USD outperforms XAU/USD as industrial demand offsets rising rate pressures

Silver extended its rally for a sixth consecutive session on Wednesday, climbing to 86.80 — its highest level since early March — while gold weakened for a second straight day, slipping below 4,700. 

The divergence highlights how the two metals are increasingly responding to different market drivers despite both traditionally being influenced by US interest rates and the dollar. 

Gold pressured by hotter US inflation and rising yields 

Gold has come under renewed pressure after stronger-than-expected US inflation data reinforced expectations that the Federal Reserve may need to maintain a tighter policy stance for longer. 

US CPI accelerated to 3.8% year-on-year in April from 3.3% previously, while core inflation also surprised to the upside at 2.8%. 

Following the release, markets increased the probability of a 25 basis point Fed rate hike before year-end to roughly 35%. 

The inflation data pushed Treasury yields and the US dollar higher, reducing the appeal of non-yielding assets such as gold. The 30-year Treasury yield briefly touched 5%, while the two-year yield remained near the key 4% level. 

The dollar has also been supported by renewed safe-haven demand amid escalating tensions between Washington and Tehran, adding further pressure to the precious metal. 

Silver supported by industrial demand 

Silver, however, has remained resilient despite the tougher rate backdrop, with industrial demand increasingly overshadowing headwinds from higher yields and a stronger dollar. 

The move highlights silver’s dual role as both a precious metal and a key industrial input. Unlike gold, which tends to trade more directly on interest rate expectations and safe-haven flows, silver is also closely tied to manufacturing and technology demand. 

That industrial story has become increasingly important in recent months. Demand linked to solar installations, electronics, semiconductors and electric vehicle production has helped create a floor under prices even as the macro environment becomes less supportive. 

The market increasingly appears focused on physical demand and tightening supply conditions rather than monetary policy alone. 

Trump–Xi summit could reinforce silver demand 

The timing of silver’s outperformance is also notable ahead of President Trump’s visit to Beijing for talks with Xi Jinping — the first US presidential visit to China in nearly a decade. 

Markets will look for signs of progress on trade and supply chain cooperation, including any extension of the current tariff truce or broader framework agreements. 

Supply chain stability is particularly important for silver because China dominates much of the global clean-energy and advanced manufacturing supply chain. The country controls around 85% of rare earth processing and more than 90% of magnet production used in EVs, renewables and electronics. 

Any improvement in US-China relations could strengthen confidence across sectors heavily reliant on silver demand, including solar, chip manufacturing and electric vehicles. 

As long as industrial demand remains robust, silver could continue outperforming gold even in a higher-rate environment. 

Silver – Technical analysis 

XAG/USD has extended its rebound from 71, rising above the 100-day SMA to reach a two-month high near 87.8. The 100 SMA had been capping gains since March. This move, combined with RSI holding above 50, suggests momentum continues to favour buyers. 

A move above the key 90 level would open the door towards 96.5, the March high. 

Immediate support is seen at 81.00, the 100 SMA. 

A break below 71, the May low, would create a lower low and expose the 200-day SMA near 64.40. 

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