Silver is testing resistance near $69.38 after two failed attempts to break $70. The weekly close on Friday will be critical in establishing the metal's direction moving forward.
Two major events land this week before markets close. July inflation data arrives Wednesday, while Federal Reserve Chair Kevin Warsh delivers his first Jackson Hole address on Friday.
Economic Drivers and Market Setup
The US dollar has weakened to three-month lows following Treasury bond buyback announcements, supporting gold at three-month highs. Silver has followed the broader precious metals strength, gaining roughly 18% over the past month and 78% over the past year, though it remains down approximately 3.6% for 2026.
Market pricing shows roughly 40% odds of a September rate hike rather than a cut, with three regional Federal Reserve presidents dissenting in favor of tighter policy in July. This hawkish backdrop creates an unusual dynamic for silver traders.
Economists expect July headline PCE inflation to ease to 3.6% from 3.7%, while core inflation is forecast to hold at 3.3%. A softer print could cool September hike odds and weaken the dollar, supporting silver prices. A firmer number would strengthen hawkish sentiment and likely cap silver below $70.
Physical Market and Technical Factors
Physical demand provides underlying support. The silver market is heading for a sixth consecutive annual deficit, and COMEX inventories have fallen below 100 million ounces.
On the technical side, silver has spent 2026 reacting to Fibonacci levels drawn from the 2025 rally. The 0.618 retracement at $68.88 matches an earlier $68 target. Breaking above this level would open the 0.5 retracement near $78.98. Weekly momentum indicators show the MACD histogram approaching a potential turn to green for the first time since May 2025, though it remains below zero, suggesting fading downside momentum rather than a confirmed uptrend.
The daily chart shows stronger structure. Silver has built higher lows since July 17 and escaped its descending channel. The $62.87 level marks a key support point, with acceptance above $68.88 potentially opening $70 to $72 as the first hurdle. Loss of $62.87 would break the daily uptrend and reopen support at $54.51 and longer-term support at $49.81.
