Silver Price Forecast: XAG/USD tumbles below $66 as US Dollar recovers ahead of US PPI data

The immediate market bias for XAG/USD is bearish but event-dependent. Silver’s decline toward $65.80 reflects the combination of a firmer US dollar and rising expectations that the Federal Reserve could raise rates at its September meeting. Because silver is dollar-denominated and does not generate yield, higher US yields and a stronger dollar reduce its relative attractiveness.

The main catalyst is the US inflation sequence: August PPI is expected to accelerate to 5.3% year over year from 4.7%, while core PPI is forecast at 4.6% from 4.2%. A hotter-than-expected release would likely reinforce hawkish Fed pricing, support the dollar and Treasury yields, and increase downside pressure on silver and gold. It could also weigh on other rate-sensitive or industrial metals through tighter-financial-conditions expectations.

However, the reaction is not one-way. A soft PPI—or a benign PPI followed by weaker-than-expected CPI on September 11, 2026—could unwind hike expectations, weaken the dollar and trigger a rebound in precious metals. Silver may be particularly volatile because it combines monetary-metal exposure with industrial-demand sensitivity; a stronger growth outlook can support industrial demand, while higher rates can simultaneously pressure valuations.

Technically, the article identifies the area around the 20-day EMA near $65.88 as near-term trend support. A sustained break below that zone would weaken the short-term structure and expose the August 19 low near $62.19. Conversely, recovery toward the September 9 high near $68.33 would suggest that the current move is being treated as a data-driven pullback rather than a broader trend reversal. These levels should be viewed as reference points, not standalone signals.

What traders should monitor next:

the actual PPI result versus consensus, the immediate response in US yields and DXY, the August CPI release on September 11, and whether Fed futures continue to price roughly a 60% probability of a 25-basis-point hike. The bearish interpretation is vulnerable if inflation data disappoints or if the dollar fails to sustain its recovery.