Above $52: Silver gains despite rising US yields and Fed rate-hike bets

• 1.60% gain for Silver on Wednesday comes despite higher US Treasury yields and a firmer US Dollar.
• Further Federal Reserve rate hikes look more likely after US inflation exceeds forecasts.
• Restrictive monetary policy could persist as inflation proves stubborn, Deutsche Bank and Commerzbank warn.

Silver (XAG/USD) is up 1.60% on Wednesday. At the time of writing, the precious metal trades around $52.35, advancing even as US Treasury yields climb and the US Dollar (USD) strengthens. Inflation figures above forecasts have bolstered expectations that the Federal Reserve (Fed) will raise interest rates further.

October's US Consumer Price Index (CPI) increased 0.4%, compared with market forecasts of 0.3%. That was slower than September's 0.6% rise. Excluding food and energy prices, core CPI climbed 0.3%, matching the previous month's reading but exceeding the 0.2% forecast.

Investors are anticipating more aggressive monetary tightening as the figures deepen concerns over stubborn inflation. Markets have now fully priced in a December Fed rate increase, according to the CME FedWatch tool. The implied probabilities are 88% for a 25-basis-point (bps) rise and 12% for a larger 50 bps increase.

A 50 bps increase could be needed if October core inflation reached at least 0.3%, Fed Governor Christopher Waller had previously indicated. The latest figures meet that threshold. On Tuesday, the unexpected strength of inflation prompted heavy selling of US government bonds, briefly lifting the benchmark 10-year Treasury yield above 5%.

Three consecutive monthly core inflation increases of 0.3% have taken the three-month annualised rate to 3.75%, Deutsche Bank analysts note. This is the quickest pace since April 2024. In the bank's assessment, such persistence makes inflationary pressures increasingly hard to dismiss as temporary.

Underlying inflation is still too high and has stopped falling, Commerzbank economists similarly caution. Against a backdrop of resilient economic activity and continuing geopolitical tensions in the Middle East, the German bank expects inflation to stay stubborn throughout 2026. Any potential easing would emerge only in 2027.

A 0.68% rise in the US Dollar Index (DXY) on Wednesday extends its recovery to a second consecutive day. Although rising Treasury yields and a firmer Greenback typically pressure non-yielding assets such as Silver, the metal continues to advance. This points to sustained buying interest, but expectations of additional Fed tightening could constrain further upside.

Silver technical outlook

At $52.31 on the one-hour chart, XAG/USD remains between two key moving averages. Support from the 200-period simple moving average (SMA) at $51.52 is holding, while the 100-period SMA at $52.37 caps the price. Consolidation within these boundaries leaves the near-term bias neutral to slightly bearish. At 45.93, the Relative Strength Index (RSI) is just below its midpoint, suggesting that bullish momentum has weakened following the recent surge towards $53.00. Neither buyers nor sellers currently have a decisive advantage.

The 100-period SMA at $52.37 presents the first upside barrier. Beyond it, horizontal resistance at $53.20 and $53.72 stands in the way of a return to recent recovery highs. Initial downside support lies near $51.52 at the 200-period SMA, followed by the horizontal base at $51.10. A sustained breach of these supports would create scope for a deeper correction. If they hold, XAG/USD would remain range-bound below the nearby moving-average ceiling.

(The technical analysis of this story was written with the help of an AI tool. Know more.)