Silver tests $58 support as FOMC decision looms next week

Silver is testing minor retracement support near $58 as traders await the Federal Reserve's July 29-30 policy decision, the next binary risk event for precious metals.

Silver traded at $58.86 on the spot market July 24, holding inside the prior session's range as lower bond yields and softer crude oil prices offset pre-FOMC positioning pressure, according to market data.

"Silver is sitting inside a long-term retracement zone and the 50% level at $60.83 is the first test for the bulls," James Hyerczyk, a technical analyst with over 40 years of market experience, said. "Holding the $55.60 low was a start. Reclaiming $60.83 would signal that the short-covering has room to extend."

The metal corrected sharply from its 2026 highs, losing ground for four consecutive weeks through mid-July before finding a floor at $55.60. The long-term retracement zone between $46.48 and $60.83 is providing the current support band. The Dollar Index slipped to about 101.36, offering relief after weeks of dollar strength pressured commodities. The probability of a Fed rate hike in September eased to 59% from 64% after the May PCE price index matched expectations at 4.1% year over year, according to Bloomberg data.

The FOMC decision on July 29-30 represents a binary risk event. A hawkish hold — or any signal that the September meeting remains live for a hike — could strengthen the dollar and push silver back toward $55.60. A dovish outcome would remove the primary headwind that has suppressed the metal despite strong industrial demand from solar, electronics, and AI-related manufacturing.

Supply-Demand Fundamentals Remain Constructive

The physical market tells a different story from the price action. The Silver Institute expects global industrial silver demand to remain above 700 million ounces in 2026, driven by solar panel manufacturing, electronics production, and AI infrastructure. Mine supply has not kept pace with consumption, and the deficit has widened as prices corrected and marginal production became less economic.

Major banks maintain bullish long-term forecasts despite the recent selloff. J.P. Morgan expects silver to average about $81 per ounce in 2026 on strong industrial demand and supply tightness. Goldman Sachs is looking at $85 to $100 as the energy transition drives consumption higher. Citi has outlined scenarios where silver reaches $110 if physical shortages intensify.

Key Levels to Watch

On the upside, silver faces resistance at $60.83 — the 50% retracement of its all-time high — followed by $63.58 and the 200-day moving average at $69.41. Support below $58.73 sits at $55.60, the multi-month low tested in mid-July, and then $52.67.

The relative strength index on the 4-hour chart recovered to about 56, indicating bullish momentum has returned without entering overbought territory. Silver is trading above both the 50-period exponential moving average at $58.50 and the 100-period EMA at $58.34, a constructive short-term signal.

This article is for informational purposes only and does not constitute investment advice.