Silver Price Forecast: XAG/USD Pulls Back Below $68 Ahead of US PCE Inflation Data

During Tuesday's Asian trading session, silver prices pulled back after a recent strong rally, currently trading around $67.92 per ounce. The decline is mainly attributed to market caution ahead of the release of the US July Personal Consumption Expenditures (PCE) price index, with some investors locking in profits, putting temporary pressure on the white metal.

**Short-Term Focus on Inflation Data and Central Bank Signals**

The core driver for the precious metals market this week comes from the macro front. Markets are closely watching the upcoming US PCE data, the Federal Reserve's preferred inflation gauge. Recently, concerns over the US fiscal outlook and cooling rate hike expectations have weighed on the US dollar, which had previously pushed silver prices above the $70 mark. Therefore, the outcome of this inflation data, along with subsequent comments from Fed Chair Kevin Warsh at the Jackson Hole symposium, will provide key clues for the rate outlook and directly determine silver's next move. According to the CME FedWatch tool, traders currently price in roughly a 40% probability of a Fed rate hike in September, with market views divided.

**Pullback Does Not Alter Recent Overall Strength**

Despite Tuesday's price decline, silver posted a gain of more than 6% last week, a standout performance. The Treasury's announced buyback support program pushed the US dollar index to multi-month lows, providing strong upward momentum for precious metals including silver. Market reports indicate spot silver briefly touched the $70/oz level last week, the highest since mid-June. The current decline appears more like a technical correction after sustained gains, with fundamental support for silver still intact—particularly on the geopolitical front, as the US's tough stance toward Iran also brings some safe-haven demand to precious metals.

**Market Watches Long-Term Expectations and Geopolitical Risks**

Looking ahead, some institutional model forecasts suggest silver prices still have upside room within the year, potentially reaching $70.54/oz by the end of this quarter. However, these projections depend on numerous variables, and upcoming major events and data will test their validity. Meanwhile, geopolitical tensions—such as US threats of additional economic sanctions on Iran—could intermittently affect silver prices through pathways linked to the dollar and safe-haven sentiment, and investors should remain vigilant.