Silver (XAG) Forecast: Trades Eye $31.72 Pivot as Inflation Fuels Concerns Over Rate Cuts

Silver Holds Near Key Technical Level

Silver prices are lower on Wednesday, following the release of the U.S. consumer inflation report. The market is currently straddling its 50-day moving average of $31.72, a critical technical level that could determine its near-term direction. Key upside targets include a retracement zone between $32.26 and $32.87, while downside support rests at pivots of $31.29 and $30.61.

At 14:18 GMT, XAG/USD is trading $31.79, down $0.11 or -0.34%.

Annual Inflation Rate Meets Expectations

The U.S. annual inflation rate rose to 2.7% in November, with core CPI increasing by 3.3% on an annual basis, both aligning with consensus forecasts. These figures come as the Federal Reserve prepares for its policy meeting next week, where a 25-basis-point rate cut is almost certain.

While inflation is down from its 2022 peak, it remains above the Fed’s 2% target, raising questions about the pace of future monetary easing. Fed Chair Jerome Powell’s upcoming commentary will likely provide guidance on the central bank’s stance going into 2024.

Broader Market Trends Influence Silver

Other precious metals experienced declines, with platinum down 1.1% to $931.10 and palladium slipping 1% to $959. Meanwhile, gold edged higher, benefiting from its status as a hedge against inflation and economic uncertainty.

In fixed-income markets, the 10-year Treasury yield held steady at 4.23%, reflecting a cautious tone as traders await the Fed’s decision. The stability in yields and the dollar’s strength has contributed to headwinds for silver prices.

Short-Term Forecast

Silver’s near-term direction hinges on its ability to maintain or break through the 50-day moving average at $31.72. A close above this level could signal a rally toward $32.26–$32.87, supported by a dovish Fed stance. However, failure to hold above this level could trigger a decline to the lower pivots of $31.29 or $30.61, particularly if the Fed signals a slower pace of rate cuts.

Traders should remain vigilant, as Fed policy decisions and technical indicators will play pivotal roles in shaping silver’s price action in the coming weeks.

More Information in our Economic Calendar.