Silver (XAG) Forecast: CPI Data, Fed Minutes Set the Stage for Silver’s Next Move

Silver Slips for Third Straight Session, Fed Minutes Awaited

Silver prices extended their decline on Wednesday, marking the third consecutive session of losses, though remaining above the previous day’s low of $30.12.

With the metal currently showing downside momentum, the next key level to watch is the 50-day moving average at $29.58. Traders are eyeing this level as a potential support zone, where buying interest could emerge. Silver’s price trend in the near term will likely hinge on upcoming U.S. consumer and producer inflation data, which could sway Federal Reserve policy and impact interest rates.

At 12:53 GMT, XAG/USD is trading $30.54, down $0.13 or -0.44%.

Fed Minutes Could Influence Rate Expectations

The Federal Reserve is set to release the minutes from its September meeting today, which may shed light on the contentious decision to implement a half-percentage-point rate cut.

The unexpected size of the cut marked the first rate decision in 19 years that faced a dissent from a Board Governor, revealing significant disagreement among policymakers. Governor Michelle Bowman voiced concerns about inflation risks and favored a smaller quarter-point reduction, while Fed Chair Jerome Powell noted “broad support” for the more aggressive cut.

The minutes will offer insights into the internal debates that shaped the decision, potentially influencing investor expectations for future monetary policy. Projections during the meeting indicated a wide range of views, with forecasts for additional rate cuts by the end of the year varying from zero to 0.75 basis points.

Impact on Precious Metals

Gold and silver are expected to react significantly to the tone of the Fed minutes. Signs of a dovish outlook could spark buying interest in precious metals, particularly if inflation data indicates easing price pressures. Gold, often viewed as a hedge against monetary easing, may see stronger demand, while silver could follow suit. However, the industrial component of silver’s demand adds complexity, as economic data will also affect the metal’s prospects.

Short-Term Outlook for Silver

In the short term, silver’s ability to hold above the 50-day moving average at $29.58 will be crucial. Should the level provide support, a rebound may occur, especially if inflation data hints at weaker price pressures, prompting dovish expectations from the Fed.

Conversely, a break below this support could see silver testing lower levels, with market sentiment hinging on economic data and the Fed’s policy signals. Traders should remain vigilant, as upcoming data releases could lead to heightened volatility.