Silver Price Forecast Under Pressure: Could Inflation and Treasury Yields Push XAG/USD Toward $60?

(MENAFN- Your Mind Media ) In my view, silver is now entering one of the most critical phases—of 2026—not because the bullish trend has completely lost its fundamental support, but because the market has suddenly shifted from pricing in a more accommodative monetary environment to considering the possibility of renewed monetary tightening. After XAG/USD reached elevated levels in recent months, the metal is now trading near the $63 area amid rising inflationary pressures and higher U.S. Treasury yields. This combination is precisely what makes me more cautious toward silver in the short term, even though I do not believe its long-term fundamental outlook has turned fully bearish.
The main challenge facing silver at the moment begins with U.S. inflation. Higher energy prices, combined with persistent price pressures, have brought back a scenario that investors had started to rule out: the possibility that the Federal Reserve may be forced to raise interest rates rather than move quickly toward a more accommodative policy. This shift in expectations is particularly important for precious metals because higher borrowing costs increase the appeal of yield-generating assets, while silver itself does not provide a recurring yield. In my view, persistently high inflation will be the greatest risk facing silver in the coming period, particularly if it is accompanied by a stronger U.S. dollar and higher real yields.
More importantly, markets are no longer treating a rate hike as a distant possibility. Current expectations indicate that a 25-basis-point rate hike at the September 15–16 meeting has become the strongly favored scenario, after the probability of further tightening increased sharply over a short period. In my view, the problem for silver is not the rate hike itself, as much of it has already been priced in, but rather the message the Federal Reserve sends after the decision. If policymakers signal that inflation could force further rate hikes in the coming months, we could see another wave of repricing in Treasury yields and the U.S. doll—r—an outcome that would be clearly bearish for XAG/USD.
This brings U.S. Treasury yields into focus as the variable I consider most important when assessing the current price action. A rise in the 10-year Treasury yield above 5% would be highly significant for precious metals, as it increases the opportunity cost of holding silver and gives investors an additional reason to redirect capital toward fixed-income assets. More concerning is that the current rise in yields is not driven by the Federal Reserve alone; it is also fueled by higher energy prices, inflation concerns, and the U.S. government's financing needs. Therefore, if the 10-year Treasury yield remains above 5%, I would view that as an important short-term bearish signal for silver.
At the same time, however, I do not believe that reducing the silver story to the Federal Reserve and Treasury yields provides a complete picture. Silver differs from gold in its underlying composition because it combines the characteristics of both a precious metal and an industrial metal. As a result, any potential slowdown in industrial demand could weigh on prices, but continued demand from the energy, technology, and electrical industries could provide silver with structural support over the medium term. The strong rally silver experienced in August, when it gained more than 15% according to some market data, also confirms that investor appetite for the metal was strong before inflation and higher yields returned to the forefront.
From an investment-flow perspective, I believe the picture has become more complicated. The current decline does not necessarily indicate a complete exit from silver; instead, it could be part of a repositioning process following a strong rally. Some analysis of CTA fund positioning suggests that trend-following positions have moved closer to limited long exposure, indicating there is still significant potential for shifts in capital flows if the decline accelerates or the market enters a prolonged sideways range. For this reason, I believe a break below key support levels could accelerate the move more sharply than the current price action suggests, as systematic funds may be forced to reduce their positions once a change in trend becomes more firmly established.
As for my outlook, I see the $63 level as a particularly important test for silver, not only from a technical perspective but also because it represents a point where inflation, interest-rate, and yield expectations intersect with investor behavior. If XAG/USD fails to defend this area while U.S. Treasury yields continue to rise, I believe the path could open toward a test of $60, and potentially even lower levels if the decline develops into a broad liquidation wave. At the same time, however, I would not treat $60 as an inevitable downside target, because any decline in Treasury yields or sudden weakness in the U.S. dollar could quickly bring buyers back into the market.
Therefore, my preferred short-term scenario is for continued volatility and downside pressure as long as expectations of tighter monetary policy and elevated yields remain dominant. A genuine bullish reversal, in my view, will not come from a modest decline in yields or price alone, but when the market begins pricing in the end of the tightening cycle once again, with Treasury yields and the U.S. dollar declining in tandem. At that point, silver could regain its bullish momentum toward the $67–$68 area and potentially move back toward its previous highs later on. This is why I believe the current battle is not simply between $60 and $68, but between two opposing economic narratives: persistent inflation and a more hawkish Federal Reserve on one side, and continued investment and industrial demand for silver on the other. In my view, the Fed's tone and the trajectory of U.S. Treasury yields will be the decisive factors determining which of these two narratives prevails in the weeks ahead.

MENAFN16092026006667014463ID1111671770